With more than 15 insurers who are currently suffering from underwriting in the agricultural sector, ZAKA ABD-KHALIQ analyzes the consequences of this development.
Agriculture remains the most important source of growth in many developing countries, and Nigeria is no exception. It is also a livelihood for the rural population, as well as a source of investment opportunities for the private sector. But since the discovery of oil, we as a country have moved into agriculture, which used to be the basis of the national economy until the discovery of crude oil.
However, after renewing the commitment of the federal government under the leadership of President Muhammad Bukhari to diversify the economy from oil to agriculture, farmers are now resuming work on their agricultural land.
And like all human risk-related efforts, agriculture is no exception.
Agriculture is subject to adverse natural phenomena, such as drought, flooding, storms, pests, diseases and others.
The impact and economic costs of such disasters, according to experts, may increase further in the near future due to climatic factors caused by climate change, while these events in most cases can impoverish the relevant farmers if they are not tested or monitored.
To this end, there is a need for a risk mitigation mechanism to ensure that farmers and other players in the value chain in agriculture are not lost at every insured risk.
It was in recognition of the need to insure the agriks that some insurance companies are now covered by insurance, having received regulatory approval.
In addition to the Nigerian Agricultural Products Insurance Scheme (NAIC), which is solely responsible for insuring the agricultural sector, underwriting firms such as; Relationship confidence, leadership, IGI Plc, AIICO Insurance Plc, Royal Exchange Plc, among others, are now offering agricultural products in an effort to insure risk in both livestock and agriculture.
With this development, farmers can now go home and sleep, paying the necessary premium, knowing full well that insurers must absorb the risks that appear in the way of their work.
Agricultural insurance protects against loss or damage to crops or livestock. It has great potential to ensure the value of low-income farmers and their communities, both by protecting farmers when shocks occur and by encouraging large investments in crops.
Agricultural insurance may compensate policyholders for losses, although such reimbursement products are relatively rare due to the high administration cost and fraud risk. Most often, agricultural microinsurance is based on indices, providing farmers with payments tied to an index indicator (for example, storm rain), rather than compensating them for crop losses.
The premium paid for insuring crops and livestock usually ranges from 2.2 to 6 percent of the cost. assets. Coverage is usually during the year, but there are also short-term agricultural products, depending on the choice of the insured.
COMPANIES OFFERING AGRICULTURAL INSURANCE
NAIC’s primary responsibility is agricultural insurance, and to that end, the company reassured its insured farmers and farmer groups in various states of the federation that were caused by floods or other insured agricultural risks that it would compensate them for their losses.
the managing director of the corporation, Ms. Falashade Joseph, noted that NAIC is very closely monitoring its corporate responsibility to help them and plow them towards prosperity through the timely payment of appropriate compensation.
She also stated that in addition to insuring the risk of crop damage from flooding, the NAIC provides insurance against crop losses resulting from fire, lightening, drought and pests.
In addition, she stated that the risk of death or livestock caused by an accident, illness, fire, lightning, storm or flooding is insured by the NAIC, adding that the accrued premium paid to the corporation is 50 percent subsidized by federal and state governments.
In the same vein, Leadway Assurance Company Limited also received a license from the National Insurance Commission (NAICOM) for agric insurance and some of its policies; A farm insurance policy for pig farming, an insurance policy for a pig farming farm property and an insurance policy, a crop insurance insurance policy and a leading life insurance policy.
Royal Exchange Plc said it received approval from the National Insurance Commission to ensure agribusiness.
The regulator also agreed with AIICO Insurance Plc to provide agriculture in the country.
Speaking about development, its managing director / CEO Mr. Edwin Igbiti said: The company was strategically positioned to become a major player in the insurance of agricultural products in order to provide much-needed protection for different players in the value chain of agricultural products. The firm, he said, was uniquely positioned to offer agricultural insurance to Nigerian farmers at all levels, as well as to investors who want to use the huge opportunities of the sector thanks to their valuable insurance offers.
Linkage Assurance Plc is now ready to start underwriting rural insurance after it has been approved by the National Insurance Commission (NAICOM).
This, according to the firm, provide linkages with farmers and service providers in the value chain of agriculture to ensure greater sustainability and economic growth.
Insurer said that Nigeria’s agricultural sector needs insurance to remain sustainable and achieve long-term growth expectations, calling on stakeholders in the agricultural value chain to cover insurance, reducing persistent risk and transferring the burden to insurers for effective risk management. farm for operators in this sector.
Industrial And General Insurance Plc is one of the pioneers who insure the risks of underwriting in the agricultural sector of the country's economy.
REACTIONS OF INTERESTED PARTIES
Calling on its insured farmers to do everything possible to prevent and minimize the adverse effects of heavy rain and flooding on their farms, the NAIC boss urged the insured flood victims to inform the nearest NAIC office in their state of their torment properly maintain their timely.
For other farmers who may have suffered flood losses, but who have no agricultural cover, she urged them in the future to take advantage of the corporation’s agricultural insurance solutions in accordance with the policies of President’s Government Muhammad Bukhari offers protection to farmers who have responded to the patriotic appeal return to agriculture.
Speaking at the seminar, the director of Inspectorate, NAICOM, Mr. Barineka Thompson, said that the commission had previously granted product approval to five insurers participating in the indexed agricultural insurance pilot scheme (IBAI).
He expected that as a result of the increased awareness and the upcoming capacity building program for agricultural insurance based on indices, more insurance companies would participate.
According to him, the approval of five underwriting firms is in line with the current efforts of the federal government to diversify the Nigerian economy and create opportunities for agricultural development and employment, emphasizing that IBAI is the government’s policy support program.
NAICOM, he said, collaborates with NIRSAL on the initiative, stating that The pilot scheme is currently operating in 10 states. States include; Adamawa, Bauchi, Benue, Kaduna, Kano, Kasin, Kebbi, Nasarava, Tarab and Zamfara, while the cultures covered by this initiative; rice, corn, soybeans and sorghum.
Responding to this, the Managing Director of NIRSAL, Mr. Aliya Abdulhamed, also reported that 25,000 farmers have subscribed to the IBAI scheme.
He noted that in addition to a partnership with a Kenyan firm, the federal government recently signed partnerships with a leading Moroccan agricultural insurance company and a reinsurance company to provide technical support in expanding the range of agricultural insurance products in Nigeria.
“NAICOM was instrumental in achieving this success. Today, we are pleased to announce that we have an index crop insurance product that covers the risks from illness, weather, natural disasters and a number of other external factors. Since the launch of the insurance product, more than 25,000 small farmers have subscribed to it, ”he said.
Insurance Commissioner Alhaji Mohammed Kari said Index Insurance was a new concept in Nigeria and sub-Saharan Africa, saying it was appropriate to build capacity to increase progress in achieving efficiency and efficiency in index-based insurance in Nigeria.
For his part, the Deputy Managing Director / Chief Operating Officer of the African Reinsurance Corporation, Mr. Ken Agogovbia, said that subsidies for index goods in agricultural insurance have great prospects on the continent, especially because food security is becoming a major issue for policy makers in the developing world. country.