OMAHA (DTN) -- Farmers who consistently produce crops on lower-risk fields could potentially save $10 to $15 an acre on crop insurance under a new private insurance program that uses artificial intelligence to evaluate agricultural risks field by field.

SAGE, an agricultural technology company focused on AI-powered risk analysis, is partnering with global insurance brokerage Aon plc and crop insurance provider AgriCap to launch a new crop insurance product for corn and soybean growers in 15 states across the heart of the Corn Belt beginning with the 2027 crop year.

SAGE was co-founded by former USDA Under Secretary Robert Bonnie, CEO Bill Veghte, a technology executive, and Deon Blaauw, an AI scientist and the company's chief product officer.

The companies contend that federal crop insurance, which relies heavily on county-level risk factors when setting premiums, doesn't adequately distinguish between individual farm fields that consistently produce crops with relatively little yield volatility and those that face greater production risks.

The result, Bonnie argues, is that farmers with lower-risk fields may be paying more for crop insurance than their individual risk warrants.

"If you think about the risk spread in a county, it's wide enough in a lot of counties that even with the federally subsidized crop insurance, we can actually beat the price of USDA crop insurance for essentially the same cost or less cost but the same coverage," Bonnie told DTN in an interview.

SAGE's insurance product is designed to complement rather than replace federally subsidized crop insurance. Bonnie said farmers could purchase federal coverage at 50%, 60% or 70% of their expected production, then use the new policies to obtain higher coverage levels at potentially lower premiums.

Aon's modeling suggests some growers could save $10 to $15 an acre on that additional coverage, although actual savings would depend on the risk characteristics of individual fields.

"We think there's an opportunity for farmers to save money here, get a comparable or better product," Bonnie said.

HOW THE INSURANCE WOULD WORK

SAGE's technology evaluates individual fields to determine their relative exposure to production losses, allowing insurers to distinguish between higher- and lower-risk acreage within the same county.

The company's artificial intelligence system analyzes large volumes of data involving soils, water, weather, climate and agricultural management practices to develop a more precise picture of the factors affecting crop yields and production risks.

Veghte, SAGE's CEO, said the technology recognizes differences farmers have long understood about their own land. He pointed to fields his family farms in New Hampshire, where some acreage regularly experiences prevented planting because of wet conditions while other fields have much more favorable growing conditions. Yet those fields face similar insurance pricing factors.

The goal is to identify fields that pose less risk than county averages would otherwise indicate, allowing insurance companies to offer more competitive premiums. Veghte compared the situation to health insurance, where people who do not smoke pay lower premiums than people who do smoke.

The companies expect the greatest opportunity to be in the higher levels of crop insurance coverage, where federal premium subsidies decline as coverage levels increase.

Bonnie and Veghte indicated the private policies would generally target coverage between 60% and 90%, depending on the individual field and the farmer's existing federal coverage.

"We think of it as augmenting, not replacing," Veghte said.

The new insurance policies would also follow the existing crop insurance calendar, including the spring enrollment period. Farmers would continue working through insurance agents, who could offer the private coverage alongside federal policies.

USING AI TO MEASURE RISK

Bonnie said the concept of using crop insurance to reward farmers for adopting practices that reduce production risks is not new.

During his tenure as USDA undersecretary for Farm Production and Conservation, the department explored ways to develop insurance products that could recognize the benefits of regenerative agricultural practices. The challenge was determining how those practices affected risk on individual farms.

"We didn't have the ability to sort of pick landowners up out of the risk pool and understand their individual risk," Bonnie said.

The emergence of more powerful artificial intelligence tools in the past few years has changed those capabilities.

"We just need some of the capabilities that AI now gives us to handle a massive amount of data, and then to make logic across those different data pools essentially," Bonnie said.

Veghte, who previously held senior technology positions at Microsoft and Hewlett-Packard, said SAGE has developed an AI engine capable of combining soil, water, weather and management information with agricultural process models.

Bonnie said the approach also creates opportunities to develop insurance products without additional federal premium subsidies.

"No taxpayer subsidy," Bonnie said, adding that encouraging practices that reduce production risks could potentially lower federal crop insurance costs over time.

SAGE worked with Aon through approximately six months of testing and analysis to evaluate the technology's ability to assess agricultural risk. Aon already has an established agricultural insurance business providing crop insurance risk modeling, actuarial analysis and reinsurance services. The global brokerage has reported placing agricultural insurance business in nearly 50 countries.

REWARDING SOIL HEALTH AND CONSERVATION

Beyond reducing insurance costs for farmers with inherently lower-risk fields, the companies also see an opportunity to reward agricultural practices that improve soil health and reduce yield volatility.

Bonnie pointed to no-till farming and cover crops as examples of practices that can help reduce production risks.

By evaluating individual fields, SAGE's technology could potentially recognize those benefits in insurance pricing rather than relying on broader county-level averages. Bonnie said the new insurance technology could help farmers reduce the financial risks of adopting new conservation practices.

It also could allow insurance policies to reflect higher prices farmers expect to receive for crops grown under low-carbon production programs such as the 45Z Clean Fuel Production Tax Credit.

"If somebody's getting paid a premium for low-carbon corn, you can actually build that into the policy because you can not only offer the comparable policy from a risk management standpoint, more cheaply, we could actually peg it to a higher price," Bonnie said.

That flexibility could also appeal to food companies and other agricultural businesses seeking to encourage conservation practices among farmers in their supply chains.

Bonnie said insurance could become another tool for companies trying to improve the resilience of agricultural production within particular grain-buying regions or watersheds.

ANOTHER TOOL FOR FARM MANAGEMENT

Along with the insurance product, SAGE plans to provide participating farmers with access to its SAGE Almanac, an AI-powered agronomic information tool.

Veghte described the Almanac as a dynamic agronomic report that incorporates information about individual fields, including soil conditions, historical weather and crop production.

The tool is intended to help farmers evaluate decisions involving planting dates, seeding rates, fertilizer applications and other management practices.

Veghte said SAGE has been testing the technology across tens of thousands of acres in the Corn Belt.

The Almanac is designed to provide farmers with field-specific management insights using the same technology that evaluates their production risks.

The company also plans to make the Almanac available beyond farmers purchasing its insurance product.

AGRICAP PROVIDES AGENT BACKING

SAGE will provide the analytical technology behind the new insurance product, while Aon will help structure and price the coverage and arrange the capital needed to support it.

AgriCap, a specialty agricultural insurance provider, will serve as the insurance partner responsible for bringing the product to market through its network of insurance agencies.

The new product also could be offered through captive insurance arrangements, allowing agricultural businesses or groups of producers to structure insurance coverage around particular geographic regions, production practices or supply-chain needs.

Veghte stressed that eligibility will be determined field by field, rather than simply identifying particular farmers or counties as lower risk.

Even fields in counties with relatively high production risks could qualify if the company's analysis indicates their individual risk is lower than the county average.

"There's some counties where it's just crazy. I mean, it's just high risk. But within those counties, there are clearly low-risk fields," Veghte said.

To learn more about SAGE, go to https://sage.ag/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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