Expert calls for opening-up of agric insurance market for innovation, efficiency

To build capacity, innovation and efficiency in agric insurance business, expert has called for opening-up of the industry for more private and international players to come in.

This is believed would enable the country realise the growth potential in agribusiness with improved risk management for agric farmers and other players in the value chain.

According to the expert, the potential of the industry is huge given the country’s population of about 177 million; 2.47 percent population growth rate; 70 percent labour force engaged in agribusiness and current efforts of the present administration to diversify the economy.

Adelaja Adesina, managing consultant, Bdellium Consult Ltd, speaking at the 2016 National Insurance Conference organised by Insurance Industry Consultative Council, said insurance can be the vehicle to drive Nigeria’s agricultural potential.

Adesina said in order to achieve this; insurance operators must understand and build capacity for agribusiness by having agric desks managed by qualified and experienced professionals who understand the different spectra of agribusiness.

“Agricultural insurance must be modelled and designed to take cognizance of the peculiarities of each type of agribusiness.”

He queried, “If we say 60 percent of our GDP is from agriculture, then why limit the business to three or four insurance companies?”

Adesina stated that government should as a matter of urgency open-up the space to register more companies to undertake agric insurance; lobby the government to extend 50 percent subsidies to all agric insurance companies, and not just the Nigerian Agricultural Insurance Corporation (NAIC) alone.

“Practitioners should understand the value chains and know when to outsource critical components to qualified and experienced professionals, and agric risk management should be the focal point.”

In his recommendations, he said Nigeria’s agricultural insurance market should include more Nigerian private and international players to promote innovation and efficiency, and firms must build capabilities for analytics underwriting and claims management to meet global standards by having round pegs in round hoes.

He also advocated that CBN should encourage Banks to bundle insurance with agribusiness loans.

“Premium is automatically deducted from loan and premium subsidies given by government should be for all agric insurance companies; insurance companies should outsource the fieldwork and management of agric and agric related projects to reduce staff overhead costs.”

Citing a report from a stakeholder engagement, private players were said to have vehemently argued for equal access to the existing public financial support to enable them participate in the agriculture insurance market.

The Central Bank of Nigeria had earlier identified insurance as a key enabler to reducing credit risk and increasing lending, while pointing also that insurance against adverse weather conditions was considered the most critical form of insurance required.

Appropriate premium was also an issue for consideration.

In its effort to reform the process of lending towards supporting agriculture, the apex bank introduced a revolutionary approach called Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL).

NIRSAL was supposed to be a dynamic and holistic approach that tackles both the agricultural value chains and the agricultural financing value chain with Insurance Facility put at $30 million. The facility’s primary goal is to expand insurance products for agricultural lending from the current coverage to help reduce credit risks and increase lending across the entire value chain.

Modestus Anaesoronye