Insurance companies in Nigeria are being backed up to develop new products that will will help advance agriculture insurance in the country.
The deal is coming from a new alliance between Africa Reinsurance Corporation (Africa Re) and the International Finance Corporation (IFC), a member of the World Bank Group.
Both parties under the agreement will help facilitate the development of agriculture insurance market space in Nigeria.
Africa Re, a pan-African reinsurance organisation, and IFC’s Global Index Insurance Facility under the agreement will help Nigerian insurance companies develop agricultural insurance products, and deepen their index insurance business lines.
These index insurance products will help protect farmers against environmental risks such as drought, floods, erratic rainfall and other natural hazards.
The deal will trigger innovative and more efficient solutions for small farmers, help them mitigate the effects of climate change-related shocks, protect them against catastrophic losses and access to finance.
They believed that the African agriculture insurance market has encountered several challenges that have resulted in the very low penetration levels of this class over the years, but the products became riddled with high costs of administration and the inherent fraud risks made it difficult for underwriters to implement.
The parties are looking at a parametric solution to encourage the smallholder farmers to access insurance at affordable terms. This solution is currently being adopted in many African markets.
According to Deputy Managing Director/Chief Operating Officer, Africa Re, Ken Aghoghovbia, This initiative would certainly go a long way in moving Nigeria towards its goal of food security in line with Africa-Re’s mission to support African economic development.”
Aghoghovbia, expressed satisfaction with the partnership as it will go a long way in assisting Nigerian insurers to develop appropriate insurance products for smallholder farmers and help move Nigeria towards its goal of achieving food security.