Africa Reinsurance Corporation has signed an agreement with the International Finance Corporation, a member of the World Bank Group to help insurance companies in Nigeria develop innovative agricultural insurance products for smallholder farmers.
The scheme was launched by the Commissioner for Insurance, Mr Muhammed Kari, on Tuesday at the headquarters of Africa Re in Lagos.
Many chief executive officers from the insurance industry as well as representatives of IFC attended the event.
Under this agreement, Africa Re would work with IFC’s Global Index Insurance Facility to provide technical support to insurance companies who were licensed to underwrite index insurance products, helping them develop their agricultural insurance business line.
Africa Re said, “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 smallholder farmers to protect their crops against losses.
This initiative will also engender financial inclusion of the smallholder farmers.”
Kari, while launching the scheme, commended IFC and Africa Re and promised that, as a regulatory body, the National Insurance Commission would do everything possible to ensure the success of the scheme and even exceed expectations.
The Deputy Managing Director/Chief Operating Officer of Africa Re, Mr Ken Aghoghovbia, speaking at the launching of the scheme said, “We are excited to be partnering with IFC in assisting Nigerian insurers develop appropriate insurance products to protect smallholder 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.”
The IFC Country Manager for Nigeria, Eme Essien, “60 per cent 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.”
The technical support provided to insurance companies in Nigeria will include specialised 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, Africa Re disclosed.
The aim of this agreement is to provide thousands of farmers with access to insurance by the end of 2020.