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Risk experience motivates insurance innovation

Hillridge co-founders Dai-Kyu Kim (left) and Dale Schilling have developed an innovative insurance product to address climate risk.
Photo: Hillridge

Having witnessed first-hand the devastating impact of extreme weather on his family’s wheat and sheep farms in north-western Victoria and the Eyre Peninsula in South Australia, Dale Schilling founded innovative risk management startup Hillridge in 2018.

Traditional crop insurance typically only covers fire and hail, leaving growers exposed to other weather-related risks such as drought, frost, heat stress and excess rain. Claims require damage assessments, and an agreement between insurer and insured about the damage value. Claims can be delayed or even denied.

In contrast, weather insurance pays out based on a pre-determined calculation, making it more transparent, fairer and faster than traditional insurance. Using an automated weather insurance platform, growers can obtain quotes within minutes based on the likelihood of poor weather in their area.

“With Hillridge’s technology, you can come up with a bespoke risk transfer solution that is right for your farming business. By offsetting downside risks, you can have confidence to explore options like planting higher-revenue crops, investing in inputs to maximise yields, forward selling and accessing premium markets,” Mr Schilling says.

Hillridge has partnered with Nutrien Ag Solutions, Mitsui Sumitomo Insurance and Victor Insurance Australia (a subsidiary of the global insurance company Marsh) to develop the platform. The GrainInnovate fund invested in Hillridge’s growth through its ‘seed’ and ‘angel’ rounds of investment.

“We also work with other companies such as Crop Risk Underwriting and Liberty Specialty Markets in Australia, and have received support from Cicada GrowLabs, the NSW Government, the City of Sydney, and the Extreme Tech Challenge over the years.”

The weather data is sourced from Scientific Information for Land Owners (SILO), an agricultural weather data service provided by the Queensland Government that covers all of Australia. SILO data is derived from weather data published by the Bureau of Meteorology.

“We are also working with the Department of Primary Industries and Regional Development in Western Australia, and other weather data providers, to incorporate more weather data into our network,” Mr Schilling says.

He says one of the biggest challenges has been raising awareness among growers about this insurance innovation.

Growers may have been aware of multi-peril insurance – which is no longer available in Australia – or weather derivatives which are available to large corporate agribusinesses, but this is the first time that weather risk transfer has been made available at scale to growers through insurance.

Hillridge is also working two other GrainInnovate investees, DataFarming and Pairtree Intelligence, to help inform growers’ decisions around manging frost and heat. This project, ‘Frost and Heat Management Analytics’, is being enabled by investment from GRDC and CSIRO.

Case Study: Wet harvest compensation

Peter*, a wheat and canola grower near Griffith, New South Wales, was worried about excess rain towards harvest in 2022. The threat of a wet harvest damaging his crop was weighing heavily on his mind, but the cost of wet weather insurance cover during a La Niña also concerned him.

He turned to the Hillridge online system to tailor a weather insurance policy for his situation and bought the cover through Nutrien Ag Solutions. He rationalised that he could afford the premium, but could not afford the hit to his finances from a wet harvest.

Peter says a weight was lifted off his shoulders when he pressed the ‘purchase’ button: “It was a relief to have it. I liked the fact that you could play around with the cover options, like how much rain you might receive, and then that would make a difference to the premium. Doing this enabled me to find the best cover for my situation.”

In the end, the worst-case scenario did happen. The area around Griffith flooded, and Peter’s crop was severely damaged by heavy rain. Hillridge’s technology triggered a claim, and he was paid by Mitsui Sumitomo Insurance within weeks of the event. This compensated for a price decrease for his wheat and canola due to a loss of product quality, filling what would have been a large hole in his finances.

*surname withheld.

More information: Bec Perry, Hillridge national sales director, 0407 389 450

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