….flags off implementation in 10 states
The National Insurance Commission, NAICOM, has disclosed that it plans to involve 15 more companies to enhance the implementation of the Index-Base Agriculture Insurance, IBAI.
The IBAI initiative is the Commission’s new financial instrument for transferring agriculture risks from individuals or groups of farmers to (international) risk carriers (insurers).
The yet to be appointed underwriting entities would join five companies that had been approved for the initiative. They include, the Nigerian Agricultural Insurance Corporation, NAIC; Royal Exchange Assurance; Leadway Assurance; Industrial & General Insurance, IGI; and AXA Mansard Insurance.
Giving the hint on the Commission’s plan to get more insurers involved in the implementation of the initiative at the IBAI workshop held in Abuja, the Commissioner for Insurance, Alhaji Mohammed Kari, said that the Commission would engage a total of 20 insurance companies by next year.
Kari expressed optimism that the current collaboration between the Commission, the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL), the African Reinsurance Corporation and the International Finance Corporation, IFC, would impact positively on the nation’s insurance sector.
He explained: “IBAI pays out benefits on the basis of a predetermined index (e.g. rainfall level, crop yield) for loss of assets and investments, primarily working capital, resulting from weather and catastrophic events, without requiring the traditional insurance services and that the purpose is to compensate farmers in the event of a loss resulting from shared risks (rather than individual risk) associated with weather fluctuations, disease outbreaks or poor yield.”
Expatiating on the implementation of the IBAI so far, the risk underwriting expert the pilot implementation had commenced in 10 northern states, adding that it is a special insurance scheme that offers farmers access to loans.
He listed the 10 benefitting states to include, Adamawa, Benue, Kaduna, Bauchi, Kano, Katsina, Kebbi, Nasarawa, Taraba and Zamfara.
Kari said that insurance companies working in partnership with the NIRSAL were already exploring innovative insurance products for livestock to help stem the tide of herdsmen and farmers’ clashes.
He clarified further: “Last year, Nigeria Incentive-based Risk Sharing System for Agricultural Lending, working with PULA advisors as its technical advisers and in collaboration with NAICOM, initiated the inception of an ‘Area Yield Index Insurance’ starting from the wet season.
“The initiative is driven on the ‘Anchor Borrowers Programme’ of the Central Bank of Nigeria’ financing window of over $1.0bn but will later extend to other financing options. A pilot implementation of Index-based Agric Insurance products in the 2017 farming season, in 10 northern states and for four crops (rice, maize, soya and sorghum) was successfully launched in 2017”, Kari added.
According to the commissioner, the Nigerian Agricultural Insurance Corporation, with 50 per cent government premium subsidies, is supposed to provide agricultural indemnity insurance covering crop, livestock, poultry and aquaculture.