Innovative insurance business protects farmers from price drops
When the 2015 milk price crisis hit, farmers’ son Richard Counsell asked why, among all the financial tools available, there was nothing to help family farmers manage risk. So he travelled the world in search of a solution – and launched Stable.
Danusia Osiowy
“I was surrounded by financial people and concepts, but none of them could help ordinary farmers - it was too complicated,” remembers Richard Counsell, founder and CEO of Stable – an online platform that enables farmers to insure against the price of outputs falling, and the cost of inputs rising.
Richard is referring to his time running a software business in Chicago, where many of the world’s farm commodities are traded, when the 2015 global milk price crisis struck.
As a Somerset farmers’ son, he was well aware of the significance of this price dive.
Determined to do something, he applied for a Nuffield Scholarship, and investigated how to simplify risk management for ordinary farmers.
Looking at the US, he found around half of farmers insuring their crops, but this was only about 3-4 per cent in the UK. However, he knew insurance was a concept farmers understood. The question then, was how to make price risk management “as simple as insuring your car”, he says.
He launched Stable, and over two years worked with Harvard, The University of Liverpool, and other insurance specialists to figure this out.
Now the company has 220 UK farming customers and the capacity to help farmers manage risk across 1,000 commodities in 40 countries.
Its 22-strong team includes highly skilled data scientists from around the world, plus insurance, technology and banking specialists. By the end of next year, the company expects to have 50 staff and four offices abroad.
How it works
From the farmers’ point of view, Stable is designed to be as simple as possible, says Richard.
A customer logs onto the platform and chooses which commodity they would like to insure and what level of price change – relative to an index – they would like to insure against. The greater the price change, the greater the premium.
Stable uses market indexes to track price changes – indexes must be reputable, transparent and as specific as possible, he adds, such as the price of wheat in a particular region, or the price of a beef cut rather than a carcass.
A UK dairy farmer wanting to insure against a drop in milk prices, for example, could insure against the Defra Farmgate Milk Price (the index used) falling below their farm’s cost of production.
When the index changes, Stable automatically pays out what is owed, without the need to make a claim or fill in paperwork.
The insurance is underwritten by Lloyds of London, a global multi-billion dollar underwriter.
Stable spreads the risk for the underwriters by insuring a wide variety of commodities that have no relationship to each other – from UK milk and wheat, to Colombian flowers and avocados. This also keeps the premiums affordable for farmers.
By removing market-led risks, farmers are then free to take risks for the advancement of their business, says Mr Counsell.
Behind the simplicity for the customer is Stable’s data team, which runs 62 trillion simulations every 14 days using complex algorithms and powerful computers.
Stable Price
- Reduces price volatility for farmers, through an insurance platform covering inputs and outputs
- Launched 2015 in response to global milk crisis
- Covers 1,000 commodities in 40 countries
- 220 farming business customers in UK, with discussions ongoing with farmers in New Zealand, France, Holland, Poland, Russia, Australia, Colombia, among others
- Works by spreading risk for the insurer, by including a wide range of commodities, from avocados and coffee, to wheat and milk
- Based on index prices, to regional level if possible
- Uses complex algorithms - team of analysts runs 62 trillion simulations every 14 days
- 22 employees, to reach 50 next year
Agri Innovation Den Competition
Agri-Innovation Den is back for 2019 with an all new format and a fantastic business development prize package worth £40,000.
The competition, supported by BASF and Farm491, is designed to showcase new developments in agricultural technology, and we are inviting entrepreneurs from across the UK to pitch their
concept and explain why it could revolutionise UK farming.
For more information on the competition and £40,000 prize package visit www.aginnovationden.com/
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