Brazil, which is home to Latin America’s largest economy, could become the biggest market in South America for agriculture-related insurance as early as 2012, expects Luiz Carlos Meleiro, agribusiness superintendent in Brazil for AGF, the Paris-based insurance company that is owned by Allianz Group of Germany.
“Brazil has been increasingly demonstrating its vocation to become the world’s granary,” Meleiro says. AGF aims to expand its rural insurance portfolio by 30% annually in 2007 and 2008.
High productivity and technology are two of the main factors indicating fast growth in Brazil’s rural insurance, Meleiro notes. Droughts are the main problem hurting Brazilian crops, and are followed by excessive rain, frost and hail.
Rural insurance only started to succeed in more developed markets such as the US, Spain and Mexico when the local governments started subsidising premiums, creating specific legal frameworks and developing tailor-made models to suit local needs, he says. Brazil’s insurance federation Fenseg and the Agriculture and Finance Ministries are working to offer a grant, Meleiro says.
AGF Seguros insures products such as agriculture-related machinery and equipment, and is investing in insurance products covering soybeans, corn and cotton. The company is also developing sugarcane and commercial forests cover, while eyeing biodiesel and ethanol too. AGF has recently launched cover for sugar and alcohol mills, which coupled with the insurance product for sugarcane fields, eases production risks, Meleiro says.