From left: Deputy Managing Director/Chief Operating Officer, African Reinsurance Corporation, Ken Aghoghovbia and Senior Financial Sector Specialist, International Finance Corporation (IFC), Mr. Shadreck Makumo at the event.
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Chuks Udo Okonta
Determined to harness the immense potentials of the nation’s agriculture sector, African Reinsurance Corporation and International Finance Corporation (IFC) have continued to play major role in capacity building for insurers underwriting agriculture business.
To effective prepare underwriters for businesses in the agric space, African Reinsurance Corporation and IFC have organised a workshop, which opened on Monday, December 2, 2019 in Lagos. According to them, the contents for the workshop were structured based on the market needs and the workshop provided an opportunity for insurers in attendance to be tutored on topics such as: Price Index; Digital Solutions in the Agriculture Insurance Space and Practical Crop Cuts Methodology which includes a physical farm visit.
The organisers expressed optimistic that with such workshop, within the next two years, the challenges facing the Nigerian insurance industry in the implementation of agriculture index insurance contracts to farmers will be a thing of the past.
Delegates from AIICO Insurance Plc
The Deputy Managing Director/Chief Operating Officer, African Reinsurance Corporation, Ken Aghoghovbia, speaking at the ongoing event, posited that since the launch of the Nigeria Index Insurance program, African Reinsurance Corporation in collaboration with IFC has initiated various activities in the market to achieve the key objectives of the program.
He noted that in order to adequately address the pain points of stakeholders in the agriculture insurance space, Africa Re and its partner reached to clients individually to collate their needs, adding that one of it turned out to be the ongoing five day technical workshop that kicks off since Monday.
He said the IFC/GIIF fund which Africa Re manages on behalf of the Nigerian agriculture industry stakeholders aligns with the founding mission in addressing the industry challenges, stressing that Africa Re supported by its partners will continue to work with IFC to provide solutions to the Nigerian agriculture industry by assisting in providing adequate reinsurance capacity, training, digital solutions and product development.
Delegates from acre Africa, Lawrence Kendulywa and Joseph Chegeh
“The good news is that Nigeria still has immense economic potential and thanks to the Federal Government Initiatives that triggered the 2012 Agricultural Transformation Agenda and set the ball rolling for the insurance industry to tap into this opportunity, through provision of affordable insurance products to farmers whilst at the same time guaranteeing food security.
“Since then, Africa Re’s role as the largest reinsurer in Africa has been put to test with the need to provide adequate reinsurance capacity to the Nigerian insurance industry, a feat that has seen the number of approved agriculture underwriters increase to fourteen as of today.
“Initially, agriculture insurance products in Nigeria were provided on indemnity basis with the attendant high costs of administration and inherent risks of fraud. Thus Nigerian underwriters over the years have faced challenges in the implementation of indemnity based insurance contracts, a turn off to insurance penetration. In an attempt to address the challenges posed by indemnity products, underwriters sought to introduce index insurance in Nigeria,” he said.
Delegates from Leadway Assurance Limited
Senior Financial Sector Specialist, International Finance Corporation (IFC), Shadreck Makumo, urged agric insurers not to promise farmers what they knew cannot be covered as this can lead to conflict when claim arises.
“Don’t promise what you cannot cover to your clients, so that, you don’t end up giving excuses at the point of claims payment,” he posited.
Such fake promise, if not fulfilled, could make the farmer nurse the belief that underwriters don’t pay claims and that, when such information is circulated among the people, it creates a negative image for the entire Insurance industry, he added.
He implored agric insurers present at the conference to embrace best practices and avoid cutting corners, especially, in the area of product pricing, he foresee a great potential for agric Insurance in the Nigerian market.
He called on stakeholders in the agric space to work harmoniously, while urging farmers and insurers to abide by the tenets of utmost good faith by embracing total disclosure during buying and selling of agric insurance contract.
Delivering his paper on ‘Risk Management & Insurance In the Agriculture Value Chain’, Erastus Ochieng of Africa Re, said 30 per cent of Nigerians directly depends on Agriculture, although, there are more small and medium scale farmers, while large scale farmers are rare.
Cross session of delegates at the event.
Stating that 90 per cent of Nigerian land is arable, he regretted that only 42 per cent of it is currently in use, calling on Nigerians to prioritise agriculture, especially, as the world is gradually transiting from oil, which is Nigeria’s main revenue generating avenue, to other alternatives .
Calling for more investors to invest in large scale farming, he believes the country has a lot of potentials in agriculture with about 48 per cent of its arable land yet to be used, while it has a consuming market of about 200 million people.
Agriculture, he pointed out, is a risky business, saying, agric insurance remains the best risk coping mechanism that must be subscribed to by all farmers, either on subsistence or commercial basis.
He urged agric insurers to leverage on technology to insurance and pay claims to farmers.
Highlighting the benefits of agriculture insurance, he said, the policy cushions the shock of disastrous losses by assuring farmers of paying claims when an insured risk occurs on their farms.
National Deputy President, Rice Farmers Association of Nigeria, Segun Atho
As agric income is an important factor in national income, he said, crop insurance also has an effect on the prosperity of the country, even as insurance gives farmers greater confidence to the farm.
Moreover, Duncan Mukonyi of Africa Re, charged underwriters to enlighten policyholders on what their policies cover at the point of insuring so that the insured is aware of the policy he or she is purchasing.
The current negative insurance perception, he said, was because most policyholders did not really understood the cover they bought , while insurers too were in a hurry to take premium, hence, did not explain in details the terms and conditions of the product to the insured.
He urged operators to be open and take their time to explain policy wordings to intending policyholders on what a policy covers instead of having a dispute at the point of claims settlement.
“In most cases, most policyholders believe that virtually all risks are covered, whereas, there are limitations. It is now the duty of insurance companies to explain to the insured what risks are covered by his policy, ” he said.