Chiamaka Ajeamo

As part of efforts to address the challenges encountered by farmers in the country, agriculture underwriters have said it plans to cover five million farmers in the next two years.

The Deputy Managing Director/Chief Operating Officer, African Reinsurance Corporation, Ken Aghoghovbia, disclosed this at a workshop in Lagos which was organised in partnership with the International Finance Corporation (IFC).

Aghoghovbia said that currently, 14 insurance firms are underwriting agric insurance but that in the past, agric insurance products   were provided on indemnity basis with the attendant high costs of administration and 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.

Hence, in an attempt to address the challenges posed by indemnity products, underwriters sought to introduce index insurance in Nigeria.

He revealed that the first index insurance program was written in 2017 for NIRSAL rice scheme where four underwriters; the Nigerian Agricultural Insurance Corporation (NAIC), AXA Mansard, Leadway and Industrial and General (IGI) provided insurance to the scheme supported by Africa Reinsurance as the team leader.

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He added 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.

However, according to him, underwriters still face challenges even in the implementation of index insurance contracts for farmers. Key among them, he said includes; 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.

“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.

He said Nigeria has immense economic potential and commended 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 concluded by expressing optimism that within the next two years, the challenges facing the insurance industry in the implementation of agriculture index insurance contracts to farmers will be a thing of the past.