Africa Re lists challenges facing agric insurance adoption

…seeks stakeholder collaboration

The inability of the insurance industry in Africa to take advantage of growth opportunities in the agriculture value chain has been linked to poor underwriting expertise and low technology adoption.

Ken Aghoghovbia, deputy managing director/COO, African Reinsurance Corporation (Africa Re) gave the hint in his opening remarks at the Agriculture Insurance Workshop organised by the reinsurance giant in collocation with her partners held at Labadi Beach Hotel (Accra-Ghana).

He said Africa Re has observed that African insurance industry is not well equipped to take advantage of the agriculture insurance opportunities.

Aghoghovbia said “The limited pool of agriculture underwriting expertise as well as constraints in adopting digital solutions have contributed to the low adoption rates of agriculture insurance programs in Africa. “

Agriculture insurance adoption in Africa is still very low standing at $400 million, out of the $46 billion global agriculture insurance market.

He noted that insurance partners who have attempted to underwrite agriculture insurance business in the continent have often posted poor-performing agriculture insurance portfolios, stating that investments in the agriculture insurance product development process is low and many stakeholders are still struggling to understand the concepts.

To reverse this trend, he said Africa Re is committed to engaging with all key stakeholders from both public and private sector with an objective of developing a profitable and sustainable agriculture insurance market in Africa.

“This undertaking aligns well with our overall objective to support economic development activities and promote insurance technical skills on the continent.

Read also: Africa Re crosses $ 1 billion revenue milestone

“However, in doing so, we acknowledge that as a corporation, we cannot achieve this noble objective on our own.

“Africa Re recognizes and appreciates the efforts being made by our valued partners in the agriculture insurance value chain. We believe that these solutions will accelerate the adoption of agriculture insurance programs not only here in Ghana but also indeed the rest of Africa.”

Among the partners are the International Finance Corporation- IFC, insurance companies from across Africa, finance institutions and commercial banks, insurance technology service providers, government agencies, insurance regulators and farmer representatives.

He said the insurance industry plays an important role in economic development by providing risk transfer solutions to cushion against uncertainties.

“Indeed, Agriculture insurance is a tool that farming enterprises can leverage in promoting agriculture production and guarantee food security. Well-implemented agriculture insurance programs will derisk agriculture value chains attracting increased investments and increased productivity. “

Africa’s journey towards economic prosperity is confronted by a unique set of challenges, and with a projected population of 2.4 billion people in 2050 and the emerging threat of climate change, the continent’s development ambition requires the collaboration of a broad range of stakeholders.