From L-R: The Deputy Managing Director, AfricaRe, Ken Agoghobvia; Commissioner for Insurance, Mr. Mohammed Kari; Mr. Aliyu Abdulhameed, Managinging Director, NIRSAL and Dr. Shedrack Mapfumo of the IFC/ World Bank Group, being faces at the ongoing training workshop on fundamentals of risk modelling for Index Insurance Products organised by NAICOM in collaboration with the International Finance Corporation, Nigeria under the World Bank Group and AfricaRe in Abuja.
From CLEMENT NWOJI, Abuja
The National Insurance Commission (NAICOM), Nigeria’s apex regulator of insurance sector, and the Nigeria Incentive-based
Risk Sharing System for Agricultural Lending (NIRSAL), are working to expand insurance products for agricultural lending from the current coverage of 0.5million to 3.8 million agricultural primary producers.
Nigeria’s Commissioner for Insurance, Mohammed Kari and the Managing Director of NIRSAL, Aliyu Abdulhameed, disclosed these at the opening ceremony of training workshop on “Risk Modelling Of Index-Based Agricultural Insurance”, in Abuja.
The four-day workshop was organised by NAICOM in collaboration with the International Finance Corporation, a member of the World Bank Group (WBG) under the Global Index Insurance Facility (GIIF), and AfricaRe as part of capacity building programme for insurers in Nigeria.
It is also for the purpose of building capacity to enhance progress in drive to achieve efficiency and effectiveness in underwriting index-based agricultural insurance in Nigeria.
He explained that the Commission, desirous of insurance penetration and market growth, had embraced Index Based Agricultural Insurance as a strategic initiative for insurance penetration and contribution to the development of Agriculture.
Kari said in the last one year, the Commission (NAICOM)
has played active role in promoting access to Agricultural Finance, adding that so far, product approval has been granted to five insurance companies participating in the Pilot Scheme of index-based agricultural insurance.
Kari said that last year, NIRSAL, working with PULA Advisors as its technical advisers and in collaboration with the National Insurance Commission (NAICOM), initiated the inception of an “Area Yield Index Insurance” starting from the”Wet Season.”
He explained that the initiative is driven on the“Anchor Borrowers Programme ”of the Central Bank of Nigeria” (CBN) financing window of over US$1.0 billion.
The Commissioner for Insurance enumerated the importance of Index Based Agricultural Insurance to Nigeria such as innovation and increase in rural financial markets, supporting economic development among others.
Further, he said: “Index Based Agricultural Insurance can have immediate impact on reducing vulnerability to weather risk by: Protecting rural livelihoods, Protecting the productive capacity of rural enterprises and farm households; Protecting financial institutions against Index Based Agric-related loan defaults; Financing disaster relief and encouraging structured social safety net policies; and Expanding rural finance through improved access and better terms of credit for farm households and agricultural
To further enable the country take adequate advantage of the Index Based Agricultural Insurance, he appealed to Development Partners to increase their supports in facilitation of comprehensive feasibility study on pilot basis; Technical assistance on the provision of historical weather index data, yield index data and infrastructure across pilot areas and jurisdictions within the region; Technical Capacity Building to regulatory authorities; Technical Capacity Building for Insurance Operators; Provide Funding Assistance with dedicated vote to the Regulators for development of Index-Based Agric Insurance and Provide resident full-time consulting experts.
Also speaking, the Managing Director of NIRSAL, Aliyu Abdulhameed, noted that there is now an index-based yield insurance product that covers risks from disease, weather, natural disasters and several other external factors.
According to him, “Since the launch of the insurance product, six months ago, over 25,000 Smallholder farmers have subscribed to it.
“As indispensable as insurance is, it is the mitigant of last resort. NIRSAL guarantees that smallholder farmers are supported in the areas of training and mentoring to ensure adherence to good agronomical practices. The support ranges from input, quality control to harvesting.
“We have made significant investments in technology solutions and innovations to counter the risks occurring in agricultural projects that we support. For instance, we have piloted the use of Geographic Information Systems (GIS) to carry out field verification so that only viable lands are utilized for agriculture.
“Using satellite imagery, we remotely monitor crop performance and growth. We deploy drones and geospatial monitoring devices to the field to detect and provide early warnings on field deviations. These measures help to promptly trigger required remediation actions to protect expected farm output and prevent unwarranted pay-outs by the insurance companies.”