cost drivers

cost drivers


Stephen Wunker has published an article on costovation and how it is creating an agricultural revolution in Africa. 

In Africa, there is a product which smallholder farms urgently need, yet which few understand or think they can afford: insurance. Droughts, pests, floods, and other natural maladies can devastate a crop for the year and put farmers – as well as whole communities – at great risk of extreme hardship.

Yet, with few exceptions, the idea of paying a premium seems like wasted expense for populations unfamiliar with insurance. Worse, the cost of selling low-value policies, servicing them, managing claims, and combating potential fraud are prohibitive for an industry that has to keep costs super-low to make its offerings affordable for these target customers. Therefore, although Africa boasts 17% of the world’s arable land, it represents under 1% of worldwide agricultural insurance.

This is a prime opportunity to illustrate the principles of Costovation – the application of innovation tools to achieve dramatically lower costs while still meeting customer needs. The story of Pula Advisors, a Swiss firm that recently closed a $6 million Series A investment, shows how to reconceive a market in ways that radically shrink costs while simultaneously benefiting customers:​

First, Pula sought to Achieve Breakthrough Perspective. Pula’s founders had deep experience in the economics as well as attitudes of African agriculture. Many firms before them had endeavored to educate farmers about the virtues of insurance, but it was a costly, uphill task that still left many problems remaining. When customers did see the value, they often held back on purchasing a policy until they could see weather or other risks starting to materialize, which is precisely when an insurer doesn’t want customers to seek its products.


Key points include:

  • Microinsurance innovations
  • Cost drivers and strategies
  • The business model

Read the full article, How Costovation Through Insurance Is Creating An Agricultural Revolution, on the