Why local knowledge is key for a crop insurance broker

As a crop insurance broker, your role is to help farmers cut through the jargon and find a product that truly protects them. But in order to do that, you have to understand the industry and local environment in which they're working. Without this wider knowledge, you can't truly help them assess the risks that are relevant to their farm and what protection they need.

The benefits of local knowledge in business

Not understanding the environment is one of the most significant barriers to communication.

Success in business requires an understanding of local context and culture. Not understanding the environment in which you're working is one of the most significant barriers to communication and can lead to misunderstandings or lack of trust on both sides.

On a global level, how you observe different customs and ways of doing business directly impact how well-received you are in the eyes of the consumer. Cultural rules may dictate who speaks first, when it's appropriate to interrupt or how business people should greet each other. Not adhering to these rules may make you appear unprofessional or uneducated.

On the other hand, from a business development perspective, understanding the context in which your clients work puts you in a better position to identify their pain points and build a personal relationship. Armed with knowledge around the pressures they're facing, you can pinpoint market gaps and build better solutions than those offered by your competitors. Meanwhile, consumers are more likely to pick a company they feel they can trust, and with whom they have a personal connection, according to Forbes. 

Being a successful crop broker in Australia may not often require knowledge of international customs, but your business can benefit from understanding the challenges local farmers face. Knowing what risks farmers in your market are managing everyday means you can discern the types of products and policies they need from you. Alongside this, you can prove your worth and generate trust by showing you've done your research and by being able to hold an informative conversation with potential new clients.

What local knowledge is essential as a crop insurance broker?

1) Crop types

Australia is a vast country, and its regions experience different climate conditions as well as soil type and terrain. If you're working across countries or regions you have to understand what crops your farmers are growing so that you can assess the risks they face and type of insurance they need.

Even close countries like Australia and New Zealand practice different types of farming, and you need to tailor your product offering for each market.

2) Risk management practices

The types of risk management practices employed by a farm vary hugely depending on the crops they grow and local conditions. As well as weather-related risks, such as hail, flooding, drought or severe winds which cause different types of damage, what's happening nearby also has an effect. Chemical spraying, for example, may protect the crops on a neighbouring farm but destroy those elsewhere. Overspray is entirely out of your client's control, but could significantly affect their yield. Similarly, unsecured livestock on another property could result in serious crop destruction on your farmer's land.

Crop production may be affected by operations on neighbouring farms.Operations on neighbouring farms may affect crop production.

3) Recent economic history

Understanding where your farmers are coming from helps you understand what they're really looking for in a policy. Some farmers want insurance through the good and the bad years, to protect their investment year in, year out. Other farmers only turn to insurance when they've had a bad year and are fearful of it happening again. 

Depending on their situation, they'll have different amounts of money to invest in an insurance policy, or to spend on improving their on-farm risk management procedures. There's no use in you selling them a policy that requires significant on-site work that they simply can't afford.

4) Local prices and international influences

It's not just what's happening on individual properties that affect how farmers operate. Wider economic activity also impact them, so staying up-to-date with international concerns gives you a much clearer picture as to the risks they're facing.

Even if their yield is booming, a good crop in other parts of the world can cause international prices to drop and result in lower than anticipated income. Meanwhile, unusual climate events across the globe could mean supply and demand changes, pushing prices up unexpectedly.

It's not just international crop prices that affect farmers, but fuel prices, local taxes and other overhead costs.

It's not just international crop prices that affect farmers, but fuel prices, local taxes and other overhead costs. Understanding farm operations helps you get a picture of how these issues affect your individual customers. Some may use significant amounts of fuel as part of their harvesting practice, while farms rely on 24-hour heating or cooling to regulate crop environment and therefore pay for electricity around the clock.

Working with a local insurance underwriter

At Primacy, our focus is on Australia and New Zealand's farmers and the risks they really face. We pride ourselves on providing solutions that support local farmers. Find out more about becoming one of our brokers by visiting our information page.