The Deputy Managing Director African Reinsurance Corporation, Mr Ken Aghoghovbia has said insurance managers’ efforts to provide coverage to their targeted five million farmers under the Nigerian agricultural Index Insurance programme for farmers is facing a lot of challenges.
According to him, key among these challenges 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 condition
Aghoghovbia, highlighted these challenges at the 2019 Nigeria Index Insurance Technical Assistance Workshop organised by the corporation in collaboration with the International Finance Corporation(IFC).
He listed other challenges facing Nigerian Agric insurance underwriters as affordability of premiums by farmers, unreliable crop cuts assessments and inadequate reinsurance capacity.
He, however, said African Re was collaborating with other relevant bodies to address the challenges.
“Today, we are happy to report that the IFC/GIIF fund which Africa Re manages on behalf of the Nigerian agriculture industry stakeholders aligns with our founding mission in addressing the above industry challenges. 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,” he explained.
According to him, since the launch of the program, the African Re, in collaboration with IFC, has initiated various activities in the market to achieve the key objectives of the program.
“In order to adequately address the pains 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.
“You will all recall the Nigeria agriculture sad story that dates back to the 70s when ‘The Dutch Disease’ reversed all the gains made then as we all neglected agriculture and opted for the booming oil and gas windfall.
“However, the recent fall in the world oil prices was again a stark reminder that dependency mainly on oil for Nigeria’s economy is not a sustainable option,” Aghoghovbia stated.
He, however, said the good news was that Nigeria still has immense economic potential and thanked the federal government for its initiatives that triggered the 2012 Agricultural Transformation Agenda, which according to him has set the ball rolling for the insurance industry to tap into the opportunity.
He said government was doing this 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”.
He noted that initially, agriculture insurance products in Nigeria were provided on indemnity basis with the attendant high costs of administration and inherent risks of fraud. According to him, against this backdrop, Nigerian underwriters over the years have faced challenges in the implementation of indemnity based insurance contracts, a turn off to insurance penetration.