Agronomic data collected automatically on-farm could be added to meteorological modelling to create insurance indices for agriculture, according to a visiting expert.

London-based Willis Towers Watson MD Risk and Analytics Julian Roberts told the Queensland Rural Press Club in Brisbane last week how the Roy Hill mine in WA’s Pilbara used a cyclone index to insure against disruption during construction.

Elsewhere, a New Zealand apple producer has linked insurance payouts to the percentage of apples meeting export quality assurance, rather than weather.

Mr Roberts has been working with the Queensland Farmers’ Federation, the University of Southern Queensland and the Queensland Government to examine indexed, rather than individually assessed, multi-peril crop insurance (MPCI).

He says Australia lags major cropping nations in its adoption of MPCI.

Farmers in Mexico, China and India have wider MPCI exposure than their Australian counterparts.

The greatest appetite is in the US, with 1.2 million policies providing 90% coverage – of which 63% is subsidised by the Government.

“MPCI, broadly speaking, requires government subsidy,” Mr Roberts said. “But on the assumption that may or may not be forthcoming, we have to offer a set of alternatives.

“The index-based solution is certainly an alternative that merits consideration.

“It’s not perfect and it has its drawbacks, but it’s simple, it’s effective and it can be delivered without an agricultural insurance infrastructure. And it can be made to work without government support or intervention, which is critically important.”

He says insurance for other agricultural sectors may also be due a revision, such as pasture cover.

“Satellite imagery is measuring the ‘greenness’ of pasture,” Mr Roberts said.

“It’s a great way of dealing with the expensive risk of dryland pasture. So there are programs in South America, Mexico and France using something like this. Even emerging countries – Kenya this year has just paid out about 2000 small pastoralists for loss of pastureland based on this system.”