The total agriculture insurance market value in Africa in 2021 was $390 million even as the total agric insurance market value climbed to $45.5 billion, the Agric manager, Africa Reinsurance Corporation (Africa Re), Mr. Isaac Magina, said recently.
This is even as the insurance companies underwriting risks in the agricultural sector of the nation’s economy generated $10 million premium in 2021 financial year.
Magina, who stated this at the ongoing Agriculture Insurance Stakeholders Conference sponsored by Africa Reinsurance Corporation (Africa Re), in Lekki, Lagos recently noted that, Nigeria is playing a big role in Agric insurance as the sector continues to attract new investors while Mali is also coming up strong in the area of agric Insurance on the continent.
According to him, “Southern and Eastern African contribution is more than 80 per cent of the premium generated in Africa. The potential of agric insurance market in Nigeria is big as underwriters were trying to make a huge difference in the continent.”
Earlier, in his opening remarks at the conference, the deputy managing director (DMD) of Africa Re, Mr. Ken Aghoghovbia, said, owing to the richness of farming in Nigeria, it is projected that the market has a potential to generate at least $600 million worth of agriculture insurance premium in a year, against the $10 million reported during the year 2021.
He added that agriculture remains a key contributor to Nigeria’s Gross Domestic Product(GDP) and like in many emerging economies, accounts for 30 per cent of the country’s total economic output; providing employment to at least 35 per cent of its over 200 million population.
With sustained pressure on food security, arising from the increasing population and the government’s push to diversify the economy, he said, agriculture will continue to be a key area of focus in many years to come.
Since 2007, he said, approval to underwrite agric business has been granted, thus, complementing the efforts of the Nigeria Agriculture Insurance Company (NAIC).
These bright economic prospects, according to him, provides huge opportunities for insurance companies to innovate and provide risk transfer solutions to cover the inherent risks associated with farming activities.
“In addition, the prominence of small holder farmers in Nigeria’s food production systems dictates that partners explore new approaches to providing effective and affordable insurance products.
“In line with our mission to support the development of African economies including that of our beloved country Nigeria, Africa Re recognises the significance of the agriculture sector in fulfilling the aspirations of many farming households,” he disclosed.
To this end, he said: “our team endeavors to work with likeminded partners, like yourselves, to make the agriculture class of insurance business a significant contributor to the ambition of increasing insurance penetration in Nigeria and indeed the entire region.
“At Africa Re, we are deliberate about leveraging our wide range of expertise and knowledge, backed by solid financial strength, to provide the much needed reinsurance capacity in the agriculture sector.”
Pointing out that, in the last five years, the market has seen exponential growth in insurance premiums from agriculture, he added that, this growth has been overshadowed by the unfavourable loss experience, pointing out that, this poor performance reveals the need for the market to invest more in stakeholder engagement including training, aimed at improving underwriting skills as well as claims handling capabilities.
“Whereas a lot of work has already been done in addressing some of these challenges, Africa Re recognises the need for continuous improvement especially during this ever-changing business environment and hopes that this workshop will help to move all stakeholders towards the desired objectives,” he emphasised.