A space solution as a reliable choice for agricultural insurance in Kazakhstan

Agriculture is one of the most important sectors in the economy of Kazakhstan. Therefore, for farmers, agricultural insurance is a key component of their activities. To get closer acquainted with the Almaty startup ecosystem, The Tech interviewed Olzhas Begaly, the technical director of the Agroinsurance startup, with the main goal of understanding how modern agricultural insurance works in Kazakhstan.

What is Agroinsurance and what functions does the new system perform?

• Agroinsurance is a new technological system that allows farmers in Kazakhstan to purchase index insurance policies online. This high-precision product enables contactless monitoring via satellite. There is no longer a need for human field control when a comprehensive analysis of all land can be obtained through space monitoring.

• The Agroinsurance service fully encompasses the application submission process, insurance contract conclusion, daily precise analysis of field conditions, and the receipt of payouts in the event of an insured case. This method is the most effective for farmers, as a clear system and constant support from the company save time and energy while adding significant confidence in the future of their farms.

• The financial benefits of this offer are also noteworthy. In 2020, following the approval of voluntary agricultural insurance, our company, Agroinsurance, signed 86 insurance contracts totaling 99 million tenge, with an additional 50% of the cost already subsidized by the state. Farmers received 535 million tenge in insurance payouts. This year, the results increased significantly to 106 contracts worth 370 million tenge, where farmers paid only 185 million tenge, and the insurance payout amounted to 728 million tenge. These figures demonstrate the effectiveness of our innovative agricultural insurance method, which is 5 to 7 times higher compared to traditional methods.

What difficulties and obstacles did you face during the development and implementation of the project?

• The main problem was that we were building everything from scratch. Previously, there was no product for index insurance in Kazakhstan at all, so we had no examples to draw from. Additionally, we needed specialists in geoinformatics who could work with satellite data. Therefore, our team decided to study in the Netherlands with partners specializing in space monitoring data processing. By immersing ourselves in this field and acquiring a wealth of knowledge there, we were able to implement these solutions in Kazakhstan.

• Currently, we are facing another challenge: farmers find it difficult to adapt to the new insurance product. We attribute this problem to the fact that from 2014 to 2019, agricultural insurance was mandatory and conducted through traditional methods, where decisions were made by specially formed commissions. However, questions arise regarding the fairness and transparency of the entire process, as this mechanism involves bureaucratic paperwork and is difficult for farmers facing challenging situations. Therefore, our most important task is to regain the trust of farmers. According to our data, 95% of the farms that insured with us in 2020 returned and renewed our services this year.

Do you have similar competitors? How do you differ from or surpass other projects?

• If we consider the scale of the CIS region, there are no competitors providing index agricultural insurance services. At the global level, similar insurance products operate in 25 countries, particularly in Europe. However, in those cases, everything is done on paper and sent by mail. Therefore, our main advantage lies in the ability to perform daily soil analysis and provide an online service. Farmers can sign contracts, submit applications, and verify data via the internet at any time and from any location. Our significant breakthrough in this area has greatly interested Swiss partners, who aim for us to establish a similar online mode in the 25 countries where index insurance already exists.

What development prospects does your startup have in Kazakhstan?

• Currently, only 1% of all agricultural land in Kazakhstan uses index insurance. Therefore, our prospect is the remaining 99% of the market. Evaluating the overall picture, we can confidently state that drought occurs in our country every year, with only the scale of the problem changing. Based on this, we must understand that index insurance is, first and foremost, an essential need for farmers themselves.

What advice can you give to aspiring startups to avoid mistakes?

• First of all, I want to emphasize the importance of expertise in your industry. You must understand the entire mechanism, statistics, and operations of your project. Additionally, you should understand your customers' mindset, analyze the target audience, and place a strong emphasis on sales marketing.

But the most important thing to always remember is that an IT solution is the best tool for scaling. Any problem can be solved locally, but an IT solution is a matter of global significance.

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