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Crédit Agricole Bank Relies on Satellite Imagery to Insure Grasslands Against Climate Risks
French grasslands cover an area larger than Greece. They provide grass and forage production, vital for French livestock. France is the number one European producer of beef and the number two producer of milk in Europe.
Challenge
Grasslands are particularly vulnerable to climatic variations: in the event of a shortage, the economic balance of livestock farms is directly threatened.
Given the decreasing scope of involvement of the national fund for the management of agricultural risks, professional organisations and government authorities have asked the private sector to step in and provide an insurance solution. However, traditional insurance methods are not adapted to protecting livestock farmers from these climate risks: owing to the specific nature of the production cycle of grasslands and the fact that forage is self-consumed, traditional insurance inspection is not suitable for evaluating production.
Consequently, Pacifica and the Crédit Agricole Group decided to provide a transparent, robust insurance contract to cover farms against variations in grass production caused by climatic events. The Group came to Airbus to develop an index-based insurance policy, based on an unbiased index estimating losses - thereby eliminating the need for on-site inspection.
The index created to assess grass production for the year compared to preceding years, is based on using satellite image time series.
Maps representing the percentage of green vegetation cover (fCover) are derived from the satellite imagery. This data is used to generate the Grassland Production Index (GPI) per country which represents the accumulated biomass produced daily from February 1st to October 31st of each year. The correlation between this index and real growth was scientifically established over seven years of research. A committee of scientific experts, under the auspices of the Ministry of Agriculture, also approved using this index in an insurance product.
Pacifica has developed an insurance product that covers the decrease in grass production characterised by the Grassland Production Index of the farm compared to the historic average production. The calculated loss rate is used to indemnify the breeders, which allows them to purchase feed for their herd. Compensation depends on the capital for which they have insured their grasslands and the deductible that they have chosen.
This tool which has been trialed with nearly 700 farmers since 2013, has been successfully commercialised by Crédit Agricole since 2015.
Advantages include: fast, simple compensation without the need for on-site inspection from insurance adjuster and without the breeder having to carry out any administrative formalities in the event of damages.
- The system protects the income of breeders, making farms more profitable
- Fast, automatic compensation without the insured party having to carry out any administrative steps or formalities
- A contract compatible with the Common Agricultural Policy, the insurance premium is subsidised by up to 65%
- Simple, flexible contracts which allow the insured parties to redefine the capital to be insured and the deductible each year
- An innovative, reliable, objective estimation of production losses, the insuree can monitor the evolution of their grassland production index month by month from an online insurance account
- The average GPI over each grassland area is available free of charge to the agricultural community by Pacifica and Airbus on the website: pleinchamp.com
"Airbus team has worked restlessly with us to set up a satellite-based index accurately describing grassland production for the entire country. Thousands of farmers now benefit from a reliable protection against grassland shortage, with paperwork effort reduced to the bare minimum."
Bruno Lepoivre,
Deputy Director of the Agriculture and Prevention Market
Organisation Involved
Crédit Agricole Assurances, the leading insurance institution in France, includes the different insurance subsidiaries of Crédit Agricole. The group provides a range of products and services including savings, insurance, pensions and real estate. These products are distributed by the banks of the Crédit Agricole group in France and in 10 countries across the worldas well as asset management advisers and general agents. The clients of Crédit Agricole Assurances include: individuals, artisans, companies, and farmers. Crédit Agricole Assurances has 4,400 employees. Its revenues at the close of 2017 totaled 30.4 billion euros (IFRS norms).
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