Industry excited as Africa Re, IFC agric financing deal drives uptake for insurance

Players in the nation’s insurance industry are excited about the new partnership agreement between Africa Re, a leading reinsurance company in Africa and the IFC, a member of the World Bank Group, that targets to help insurers in Nigeria develop innovative agricultural insurance products for small holder farmers.

Under this agreement, Africa Re will work with IFC’s Global Index Insurance Facility to provide technical support to insurance companies who are licensed to underwrite index insurance products.

 Index-based agricultural insurance, which pays out on the basis of transparent parameters like rainfall and does not require costly field visits to verify losses, provides an innovative and more efficient solution for small holder farmers to protect their crops against losses. This initiative will also engender financial inclusion of the small holder farmers.

Mohammed Kari, commissioner for Insurance and CEO, National Insurance Commission (NAICOM) while launching the scheme at Africa Re’s headquarter in Lagos, commended IFC and Africa Re and promised that NAICOM will do everything possible to ensure the success of the scheme and even exceed expectations.

He said from four insurance companies providing agricultural cover two years ago, the Commission has increased the number to 11, with another five applications already waiting approval, stating that he has no doubt that the target set for the project will be surpassed in two years.

Ken Aghoghovbia, deputy managing director/COO of Africa Re, speaking at the launching also said : “We are excited to be partnering with IFC in assisting Nigerian insurers develop appropriate insurance products to protect small holder farmers. This initiative would certainly go a long way in moving Nigeria towards its goal of food security and is in line with the Corporation’s mission to support African economic development.”

Eme Essien, IFC Country manager for Nigeria said: “60 percent of Nigerians rely on agriculture for their livelihood. Affordable and accessible risk management tools like index insurance are needed to help  farmers mitigate the effects of climate-related shocks, protecting them against catastrophic losses and unlocking access to finance.”

Essien said “IFC’s support for affordable and accessible agricultural insurance will help Nigeria’s farmers mitigate the effects of climate-related shocks, protecting them against catastrophic losses and unlocking access to finance. Developing a sustainable agricultural insurance industry also requires a strong commitment from regulators, such as NAICOM, who embrace innovation to help farmers manage their risks.”

Oye Hassan Odukale, managing director/CEO, Leadway Assurance Company Limited said the agricultural insurance space is huge with a lot of potentials, urging the regulatory authority to further create a level playing ground so that many other companies that have interest could come in.

He applauded the technical support so far received from IFC, while urging them to give more.

Kunle Ahmed, managing director/CEO, AXA Mansard Insurance Plc stated that given the huge potential in Nigeria’s agric space, this partnership to enable insurance play actively in the sector is not a misguided priority.

Ahmed noted that NAICOM has begun to create the enabling environment with through this journey.

Edwin Igbiti, managing director/CEO, AIICO Insurance Plc said for the Commissioner of Insurance presence at the launch is a clear indication that the project has got the Commission’s backing, stating that the penetration currently standing at 15,000 contracts, with 75,000 farmer beneficiaries will double

The technical support provided to insurance companies in Nigeria will include specialized product design and developing digital platforms that will enable a prospective policyholder to view index insurance products on offer, compare different products from various insurers, review the term sheet and documentation, and select their preferred policy. The aim of this agreement is to provide thousands of farmers with access to insurance by the end of 2020.