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NIRSAL, Royal Exchange unveil new insurance product for Nigerian farmers

Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), in collaboration with the Royal Exchange General Insurance has unveiled a unique insurance product which provides cover for Nigerian farmers, targeting those in the crop sub-sector in the first instance.

The Hybrid Multi-Peril Crop Indemnity-Index Insurance product- HM-II for short, would protect farmers from losses during a planting season caused as a result of bad weather in the form of low & high rainfall, early & late season dry spells, lightning, hailstorms and thunderstorms.

The HM-II piloted during NIRSAL Plc’s participation in the 2019 Anchor Borrower Programme (ABP) Wet season farming- also guards farmers against pest outbreak, disease outbreak, fire outbreak and permanent disability or death of a farmer.

At the launch in Abuja, Aliyu Abdulhameed, NIRSAL Managing Director explained that as part of the HM-II, in a case where the afore-mentioned risks materialize, benefits paid out to the farmer would be up to the maximum loan or the insured amount following the trigger from advanced satellite technology or an assessment by an Agriculture expert or both.

According to him, NIRSAL’s policies and initiatives are guided by the fact that besides the Agric sector’s contribution of about 24% to the country’s GDP, and jobs for more than 60% of the population, 80% of the sector’s contribution to the GDP is attributable to smallholder and subsistent farmers who are unfortunately the most vulnerable actors along the Agric value chain.

He said in addition to finding it difficult to access sustainable financing, Nigerian farmers and their families are often left to contend with the negative effects of many factors including bad weather, pest outbreak, disease outbreak, fire outbreak, permanent disability and even the death of the farmer.

He said on the back of these factors, and in line with NIRSAL’s mandate, the product was developed in collaboration with Royal Exchange, and support from Swiss Re as well as the regulator, National Insurance Commission (NAICOM).

Leveraging the Insurance pillar, NIRSAL aims to increase the distribution of existing and new Agric insurance products from about 0.5 million farmers in 2017 to 3.6 million farmers nationwide by 2026.

NIRSAL has already reached a milestone of 1,476,289 smallholder farmers who have subscribed to the company’s already-developed insurance products in past farming seasons, according to available information.

“The giant strides being made by NIRSAL Plc in Agric insurance are as a result of our two-pronged approach. The first is the development of innovative insurance products like HM-II that speak to the needs of smallholder farmers while the second is the increase in the number of insurance companies that underwrite Agricultural risk,” Abdulhameed stressed.

On increasing the number of insurance companies that underwrite agricultural risk, Abdulhameed noted that NIRSAL has been able to crowd in private insurance companies into the Agric insurance space through the formation of a consortium of 4 insurance companies in 2017 which has now grown to 10 insurance companies- including Royal Exchange- in the space of 3 years.

At the event, Yusuf Yila, Director, Development Finance Department at the Central Bank of Nigeria commended NIRSAL for playing a key role in the developmental role of the CBN.

He hinted of CBN plans to work out a legal backing for it’s Anchor Borrower Programme as well as other interventions of the apex bank to ensure sustainability.

Benjamin Agili, MD/CEO, Royal Exchange said the unique product seeks to protect the small-holder farmers from farming loss during a particular faming season and has gone a step further to provide life insurance of the farmer during the season in case of permanent disability or death, thereby ensuring the farmer is able to remain in business, no matter the loss or situation.

“We are full of excitement that finally, by partnering with NIRSAL, we have been able to develop an innovative agricultural insurance product-The Hybrid Index Insurance – for the insurance market in Nigeria,” he stated.

Sunday Thomas, Commissioner for Insurance and CEO NAICOM said the commission as the primary supervisor and regulator of the Insurance sector had readily lent support in the development of a hybrid multi-peril crop insurance indemnity (MCPI)- index insurance (HMII) Product for the achievement of financial inclusion of all segments of the society in particular farmers who are at the lower end of the society.

“I must commend the partnership between NIRSAL and Royal Exchange Insurance Company for the foresight to fuse both products that birthed the hybrid product that is being launched today,” Thomas noted.

He hoped that “the operations of both organizations would ensure the distribution of the product to smallholder farmers to help them build resilience against climate risks and enhance food security as NIRSAL continues to provide access to finance for smallholder farmers.”

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