Managing Director, Nigerian Agricultural Insurance Corporation (NAIC), Mrs Folashade Joseph, explains how farmers can access insurance policies to minimize losses as climate change triggers disasters such as drought, pest infestation, and flooding of farmland. She sheds light on the processes of insuring and claiming indemnity after losses. FEMI IBIROGBA, Head, Agro-Economy, reports.
Drought affected farms in the Southwest, Northcentral and other zones in July and August, making farmers lose crops. Is farm insurance effective in mitigating the effects of climate change?
Yes, very effective. The main question would be: Did affect farmers insure their farms? If the answer to this question is yes, then they have nothing to fear. All they need to do is report their losses, first verbally through phone call and then in writing within the given time so that NAIC can visit the farm to confirm their losses and possibly suggest ways of curbing further losses in the immediate and in the future. NAIC would then swing into action to adjust the claims as soon as all necessary documents have been forwarded to the corporation by affected farmers or their agents.
If so, would you give us an idea of how many farmers are enrolled for insurance cover at NAIC?
During the 2019 operational year, over 412,000 farmers enrolled under the Nigerian Agricultural Insurance Scheme (NAIS), while claims paid was over N877 million However, during the current year, the corporation has recorded a little above 250,000 as at the end of August 2020.
This is the singular reason all tiers of government and other stakeholders should get involved in encouraging farmers to ensure their farms, as a loss of such investments due to natural and unnatural perils is a loss to the whole nation and not just to the farmer alone.
What is NAIC doing on awareness creation, knowing that most farmers are ordinarily averse to insurance coverage?
NAIC has, over the years, designed a template for sensitising farmers across various states in each of the six geopolitical zones of the nation. Representative farmers are selected across the commodity associations and hosted for between two to three days, during which lectures on the advantages of adopting agricultural insurance, increasing their yield, and overall financial management are delivered.
This is in addition to periodic print media publications and diverse advertisements on electronic media. Though the effect of COVID-19 has affected the corporation’s timetable for farmers’ enlightenment and sensitisation programme for 2020, the corporation is already readjusting its timetable as could be observed from the widely televised sensitisation programme done with the farmers in Borno State last week in collaboration with the National Assembly.
In the last five years of this administration, with sporadic flooding of farms and crops, how much has NAIC paid out in compensation to insured farms?
First of all, I would like to draw the attention of all Nigerians to the fact that NAIC is not like emergency management institutions. It is an insurance company. It can only compensate those that are insured under its policies. However widely or sporadic the effects of flooding may be on farms, if such farms are not insured under the NAIC cover, such farmers cannot get compensation from NAIC. So, it is important for every farmer to insure their farms to avoid the devastation of natural and even unnatural perils, as these do not give warnings before they occur.
However, it is noteworthy that, within the last five years, NAIC has paid out about N2.0 billion as compensation to various categories of insured farmers across the nation.
Is NAIC partnering with any private sector operator to insure farm estates or property? If not, why?
The NAIC Act Cap. N89, Laws of the Federation of Nigeria empowers NAIC to underwrite agricultural risks and even subsidise the premium chargeable on some categories of crop and livestock items, by as much as 50%. However, when agricultural projects are financed through credit facilities from whatever sources, they must be insured with NAIC.
In spite of the above provision in the NAIC Act, the corporation had reached out to private sector operators through special consortium arrangements in the past. However, our experience is that the corporation bears all the underwriting processing costs, including inspection, etc, while the private operators just sit by and receive their premiums. Even when claim crystallises, it takes some time to get the proportion receivable from some of the private operators.
However, as the corporation has done in the past, it is open to any collaboration to give adequate insurance cover to all farmers in Nigeria as long as such arrangement does not undermine its enabling Act or break any other law of the Federal Republic of Nigeria.
What can farmers ensure against at NAIC and how can they go about it?
NAIC insures agriculture across the value chain, covering risks associated with primary production, transportation, processing, storage (silos), etc.
The perils covered by crop policy are fire, lightning, windstorm, flood, drought, pests/diseases, and invasion of the farm by wild animals.
Losses caused by negligence or wilful damage are not covered. Similarly, political risks and losses resulting from social risks like riots, mutiny, revolution are not covered under the scheme.
The livestock policies cover death or injury caused by accident, disease, fire, lightning, storm, and flood. Losses resulting from malicious/wilful injury, neglect, unskilled treatment, theft, and malicious disappearance are not covered. The insured under the scheme is required to meet such conditions relating to good husbandry as may be laid down from time to time by the Nigerian Agricultural Insurance Corporation.
Furthermore, almost all crop and livestock items obtainable in the nation are covered by the corporation. NAIC maintains a branch office in each state of the federation with contact addresses and telephone numbers of the branch managers.
In addition, the corporation’s website also contains salient information that can guide the farmers on how to access NAIC cover. However, all a farmer needs to do is call or go to the branch office nearest to him/her and give the detailed description of his/her farm, and NAIC officials will be there in no time. The farmer will need to complete the proposal form, after which NAIC will carry out a pre-inspection visit to the farm to assess it. Once the farm is assessed, the premium payable would be communicated to the farmer. After the premium has been paid, the policy would be issued. It is as simple as that.
You said subsidy on premium chargeable applies on some categories of crop and livestock items by as much as 50%. What are these items specifically?
Subsidised crops include rice, maize, yam, cassava, sorghum, guinea corn, beans, soya beans, and indeed all food crops. Crops such as cashew, cocoa, etc are on a commercial basis, and therefore attract no subsidy.
Subsidised livestock includes poultry, cattle, goats and sheep, rabbits, and fishery, among others. Dogs, camels, donkeys, and horses are on a commercial basis.
After all, conditions satisfied, how long would a farmer get compensated for farm losses?
In line with the corporation’s policy of prompt settlement of claims, it takes a maximum of 14 days to pay genuine claims if complete documents are made available to the NAIC by the farmers or their agents. Some claims take less.