Agri business & Weather Risks

Agri business & Weather Risks1

Traditional Agriculture insurance offers protection against events such as floods and storms. However, recently, a new form of agri. Insurance has been developed to offer protection against the effects of seasonal weather patterns such as temperature, rainfall or sunshine. These factors can have a major influence on corporate results and many firms publicly acknowledge this. As weather hedging becomes more commonplace, blaming the weather for poor results will become less acceptable.

Weather derivatives or insurance generally provide volumetric hedge protection against a reduction in sales volumes, rather than profit. Companies interested in such protection therefore generally have a good correlation between their volumes and a weather index. The index used is most commonly temperature, but rainfall, sunshine, wind speed, or other measure may also be used.

Royal Associates Insurance Brokers is one of the pioneers of weather risk hedging and have been involved in designing programmes in the tea agricultural sector in Kenya.

We have the rear expertise to advice organisations on all aspects of managing their weather risk, from determining and evaluating exposure,.

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