Offering Insurance for Agricultural Sector and Products that Support the Uptake and Expansion of Renewable Energy

Insurance Services for Agricultural Sector

AgriSompo: Integrated Global Platform for Agriculture Insurance

Sompo International Holdings (SIH) is developing AgriSompo, an integrated platform on the global market, and provides a wide range of insurance and reinsurance products to agriculture markets, mainly in North America, Europe, Brazil and Southeast Asia.

Utilizing AgriSompo, SIH underwrites insurance for farmers, agri-businesses and agricultural insurers at a common standard, and provides expertise and technology for a range of products.

Providing the Weather Index Insurance in Southeast Asia

Weather index insurance is an insurance product that pays out a contractually predetermined insurance amount when a weather index – such as temperature, wind speed, rainfall–fulfills certain conditions.
Utilizing the risk assessment technology provided by Sompo Risk Management and rainfall data estimated using earth observation satellites belonging to the Remote Sensing Technology Center of Japan (RESTEC), our Group provides weather index insurance aimed at reducing agricultural business risks in Southeast Asia, where agriculture is a key industry that is vulnerable to climate change.

In 2010, we launched a weather index insurance for farmers in Northeast Thailand aiming at reducing their damages caused by drought. Sompo Insurance Thailand developed a scheme with Bank for Agricultural Cooperatives (BAAC) to offer the weather index insurance to farmers who maintain loan contracts with BAAC.

We are developing and promoting insurance products as climate change adaptation measures for farmers of Thailand’s major agricultural exports. For example, in February 2019, we launched a weather index insurance for longan farmers while in May 2021 we launched a weather index insurance for sugarcane and cassava farmers. These insurance programs were developed using technology provided through AgriSompo.

In Myanmar, we developed a weather index insurance that covers drought risk for rice and sesame farmers in the central arid region. This insurance, developed in partnership with the Remote Sensing Technology Center of Japan (RESTEC), makes use of rainfall data obtained by earth observation satellites. This insurance is sold by Myanma Insurance, with technical support from Sompo Japan.

These weather index insurance in Southeast Asia has been recognized as meeting the requirements for membership in the Business Call to Action (BCtA). The BCtA is a global initiative launched in 2008 by the United Nations Development Programme (UNDP) and five government institutions that challenges companies to develop business models with the potential to achieve both commercial success and sustainable development outcomes.

In 2016 we received Japan’s Environment Minister’s Award for demonstrating the Principles for Financial Action towards a Sustainable Society. For our initiative in Myanmar, we received the Minister of State for Space Policy Prize, at the Second Space Development and Utilization Grand Prize presentation.

Future Plans

In the future, through the use of AgriSompo, we will work to provide solutions to agricultural risks specific to each country and contribute to the development of the agriculture sector around the world.

Insurance Products that Promote Renewable Energy

With Japan’s Renewable Electric Energy Feed-In-Tariff system starting to operate in July 2012, and a growing number of companies and other entities have been participating in renewable energy projects. For entrants into the renewable energy electricity market, we offer insurance to cover emergencies as well as risk analysis services for the project facilities’ site environments.

●Fire Insurance for Wind Power Companies: Special Clause Covers Costs to Prevent Recurrence of Accidents

Sompo Japan offers fire insurance for wind power companies with a rider that covers costs for actions to prevent accidents from recurring. For wind power companies, if accidents occur, the losses can tend to be expensive, and similar accidents are likely to recur. Thus, it is important for the management of wind power companies to identify the causes of an accident, and take measures to prevent recurrence. To address these issues, Sompo Risk Management is supporting the stable management of wind power companies by developing this rider, which incorporates our accident recurrence prevention knowhow, to provide insurance and risk management services.

●Property and Casualty Insurance for Offshore Wind Power Companies

For offshore wind power projects, insurance coverage was arranged separately for the construction process and project operations after completion. But from the perspective of preventing gaps in insurance coverage and improving the efficiency of project management, many businesses were asking for unified insurance. In response, Sompo Japan now offers insurance in the event of the occurrence of damage to offshore wind power facilities due to unforeseen or sudden accidents during facility construction and operations.

●Risk Diagnosis Services for Renewable Energy

Since September 2012, Sompo Risk Management has been offering risk diagnosis services for renewable energy. These services make use of knowledge accumulated through our risk analysis services relating to natural disasters such as earthquakes, flooding, and lightning strikes, as well as the development of risk maps. The services aim for a stable electricity supply from renewable energy, which has a low environmental impact, and involve analysis and diagnosis of site risks for renewable energy facilities such as photovoltaic and wind power electricity generation facilities.

●Wind Power Generation Business Risk Assessment Service

Sompo Risk Management analyzes and grades various risks during the operation of both land-based and offshore wind power operations at the phase of development, construction and operation. These services are aimed at reducing the potential risks of projects by encouraging the operators to take steps to reduce risks based on assessments, thereby reducing the amount of risk exposure before starting the projects.

●Risk Assessment Model for Wind Power Facilities

Sompo Risk Managemen has developed a risk assessment model dedicated for wind power facilities. Identifying the risk of electrical or mechanical breakdowns and accidents due to natural disasters and other factors using the risk assessment model enables us to quantitatively ascertain the risk of wind power projects and calculate the appropriate insurance premiums. They will further develop their services that use the risk assessment model and contribute to the spread of wind power, and support the formulation of business plans.

●Financial Impact Analysis Service for Wind Power Projects

Sompo Risk Management offers a service for wind power projects that evaluates the probability of losses occurring due to accidents from natural disasters and typical breakdowns, as well as losses due to a halt of operations when a breakdown or accident occurs, and then quantitatively evaluates the impacts of identified risks on the cash flows of business plans.

●Second Opinion Service for Wind Power Companies

Sompo Japan and Sompo Risk Management started offering a second opinion service in November 2016 for wind power companies that have purchased a fire insurance policy from Sompo Japan. Through this service, they offer advice on how to handle various types of trouble that could occur in operations and maintenance. When consulted on wind power operations and maintenance, Sompo Risk Management compiles advice from wind power maintenance companies, experienced engineers and experts, and then provides it to the client.

●Insurance Due Diligence Service for Wind Power Companies

Sompo Risk Management offers insurance design support services, with comprehensive risk assessment in consideration of the risk reduction effect by preventive maintenance efforts on operation and maintenance (O & M) of wind power companies, before arranging insurance for wind power facilities.

Initiatives through Industry-academia Cooperation

Development of Flood Risk Assessment Methods for Japan and Asian Countries

To deal with flood risk, which can be affected by medium- and long-term climate change, Sompo Risk Management is engaged in research and development into flood risk assessment methods for Japan and Asian countries to offer new insurance services and risk consulting services that support adaptation to climate change.

In Japan, Sompo Risk Management is utilizing a flood risk assessment system^*1, developed jointly with Kyoto University and Kobe University, for insurance risk management and natural disaster risk consulting.

For Thailand, they are using a flood risk assessment system developed jointly with the Foundation of River & Basin Integrated Communications to manage insurance risk and develop insurance products. They have also developed new flood scenario risk assessment methods^*2 for major urban areas in China, Vietnam, Indonesia, the Philippines, Malaysia, Singapore, and Brazil aiming at enforce risk management system.

They steadily have expanded the area to which they can apply these flood risk assessment systems and methods. In 2017, they added Myanmmar to the area aiming to develop services for Japanese companies which launch businesses in Myanmmar.

1. A system to assess the probability of future flood damage, based on various possible rainfall scenarios.
2. A method to assess flood damage under certain rainfall scenarios, including heavy rainfall observed in the past and probable heavy rainfall (e.g. rainfall of a certain intensity with the likelihood of once in 100 years).

First Private-sector Company in MEXT’s SI-CAT Program

Sompo Risk Management has become the first private-sector company to take part in the Social Implementation Program on Climate Change Adaptation Technology (SI-CAT)^*1 run by the Japanese Ministry of Education, Culture, Sports, Science and Technology (MEXT).

By collaborating and exchanging ideas with research institutes and utilizing SI-CAT’s research results, Sompo Risk Management aims to quantify the risk of climate change using the typhoon/flood risk assessment models they have developed, research and analyze the changes in opportunities associated with social systems or changes in supply and demand, aiming to improve analysis techniques and build up expertise about climate change risk.

Our aim is to contribute to a sustainable society by developing and providing new solutions to help companies and local governments adapt to climate change, using the technologies and knowledge gained through this initiative.

1. A program launched by MEXT in December 2015 to support the development and implementation of technologies to support areas requiring measures against the impact of climate change. The program Ends in March 2020.

• https://www.restec.or.jp/si-cat/en/index.html

Development of climate change impact quantification technology

Sompo Risk Management developed a technology for quantifying the effects of climate change on natural disasters, collaborating with the National Research Institute for Earth Science and Disaster Resilience (NIED) and the University of Tsukuba.

NIED and the University of Tsukuba provides climate forecasting expertise and data analysis methods, allowing Sompo Risk Management to perform large-scale analysis of typhoons and heavy rainfall using weather and climate big data. This analysis identifies trends in the average frequency and intensity of natural disasters as global warming advances, and quantifies the occurrence of extreme disasters such as major typhoons and large-scale heavy rainfall. These analysis results are then incorporated into the typhoon/flood risk assessment models we have developed for Japan, to quantitatively assess the impact of climate change on insurance underwriting.

By working with NIED, Sompo Japan and Sompo Risk Management aim to enhance the insurance underwriting risk management as well as develop and provide new insurance products and services to help companies and local governments adapt to climate change.

Participation in Global Industry-academia Cooperation Program on Natural Disasters

Sompo Digital Lab, our Group’s digital strategy subsidiary based in Silicon Valley, became the first Affiliate Member of the Stanford Urban Resilience Initiative (SURI), Stanford University’s industry-academia research program on natural disasters, in January 2019.

SURI was established in 2015 with the purpose of researching and developing the latest technologies and tools to build resilient cities and communities prepared for natural disasters such as earthquakes and floods. The university’s prospective PhD students and researchers collaborate on research and development with government agencies, companies and civil societies who share the program’s aims.

Through involvement in this collaborative research program, Sompo Digital Lab aims to fully harness our Group’s data platforms including huge amounts of big data on natural disasters and economic losses, as well as our expertise of disaster risk estimation, together with SURI’s advanced technology and human resources, to develop new services contributing to safety and security on the global theme of natural disaster risk.