Experts list impediments to participation in agric insurance

Framers and stakeholders in the agricultural value chain have failed to maximise the inherent benefits in taking up insurance for their crops and businesses due to lack of awareness, experts from Sahel advisory services have said.

In a report on ‘Key constraints and mitigating strategies to improve stakeholder involvement in the agricultural insurance space’, Sahel Advisory Services observed that farmers and agribusinesses are unaware and have a limited understanding of the benefits of insurance in managing risks. In addition, they do not believe they will receive compensation for losses incurred.

They however suggest that in order to build trust among farmers and agri-businesses, insurance providers must develop products that are easy for the users to under-stand and will leave little room for misinterpretation. In addition, insurance providers should organize extensive training sessions to educate users on the importance of using various insurance products for risk management, they experts stated.

They also argues that infrastructure such as feeder roads and proper communication facilities are required to facilitate prompt claims reported by farmers to ensure the assessment of losses by the appropriate authority

Leveraging on technology solutions, they said insurance providers should partner with mobile providers to leverage on existing networks to farmers. “Furthermore, they can also work to identify aggregators that work with large group of farmers that will benefit from insurance.”

Access to credit they observed is critical in building capacity for the farmers and motivations for insurance cover. “Agricultural insurance is costly for both farmers and insurance companies. Most of the farmers knowledgeable about insurance products are unable to access it due to lack of funding.”

Bundling insurance products with credit and input suppliers will be of immense benefit to building the value chain. Insurance providers should partner with stake-holders such as MFIs and commercial banks that lend to clusters that would benefit from such partnership.

On poor data management, the argued that in order to compute premiums and pay indemnities, insurance providers require up-to-date information on farm operations, particularly crop yields and losses from natural disasters. Most farmers do not have this in-formation and this makes it difficult for insurance providers to adequately assess claims.

Encouraging data management, it said “Depending on the specific insurance product, insurance providers will need to educate farmers on the adequate methods of recording crop yields and losses. In addition, product users require adequate technology to enhance the data management process.

For the public level insurance scheme, products are offered at a subsidized rate while private level insurance products are fully commercial. Creating synergies between private and public level insurance schemes will help the system.

“A collaborative effort is required by both par-ties in order to promote the importance of agricultural insurance and target a large majority of farmers and agricultural businesses.”