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Chuks Udo Okonta
Insurance companies underwriting agriculture insurance hope to provide cover for five million farmers in the next two years, Inspenonline can report.
The Deputy Managing Director/Chief Operating Officer, African Reinsurance Corporation, Ken Aghoghovbia, said this today at the ongoing Africa Re and International Finance Corporation (IFC) agriculture insurance workshop in Lagos, adding that presently 14 insurance firms are underwriting agric insurance.
He posited that the first index insurance program was written in 2017 for NIRSAL rice scheme where four underwriters NAIC, AXA Mansard, Leadway and IGI provided insurance to the scheme supported by lead capacity from Africa Re., stressing that a total of 14,589 farmers were covered during the wet season program and that since then approximately 191,626 small scale farmers have been insured on six major index schemes.
He expressed optimism that 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.
“In order to adequately address the pain points of our stakeholders in the agriculture insurance space, we reached to our clients individually to collate their needs, one of it turned out to be this five day technical workshop that kicks off today,” he said.
Aghoghovbia said Nigeria has immense economic potential and applauded the Federal Government Initiatives that triggered the 2012 Agricultural Transformation Agenda and set the ball rolling for the insurance industry to tap into the opportunity, through provision of affordable insurance products to farmers whilst at the same time guaranteeing food security.
He noted that 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 14 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 posited.
According to him, underwriters still face challenges even in the implementation of index insurance contracts for farmers. Key among them, he said include, basis risk outcomes, absence of reliable historical yield data sets, non-compliance by farmers to standard farm agronomy practices as well as policy terms and conditions, affordability of premiums by farmers, unreliable crop cuts assessments and inadequate reinsurance capacity.