Foremost African regional reinsurance company, African Re, has nudged farmers and other agribusinesses to clinch insurance in order to position their businesses for everlasting growth now that the industry regulators have given insurers approval to underwrite agricultural insurance.
Africa Re explained that farmers would not only benefit from insuring their businesses but also help the entire industry to harness the projected market potential of at least, USD 600 million worth of agriculture insurance premium in a year which invariably translates to GDP growth for the Nigerian nation.
Disclosing this at the Africa Re’s Agriculture Insurance Workshop for Nigeria in Lagos, the Deputy Managing Director/Chief Operating Officer of African Reinsurance Corporation, Africa Re, Mr. Ken Aghoghovbia, said that agriculture remains a key contributor to Nigeria’s gross domestic product, GDP, but is undermined by limited investments in the sector.
Aghoghovbia stated: “Agriculture remains a key contributor to Nigeria’s GDP, and like in many emerging economies, accounts for 30% of the country’s total economic output; providing employment to at least 35% of its over 200 million population.
“Since 2017, the agriculture class of business has generated a lot of interest from several market players, and currently, at least 16 insurance companies have received NAICOM’s approval to underwrite the business, thus complementing the efforts of the Nigeria Agriculture Insurance Company (NAIC),” the reinsurance expert stated.
Mr. Aghoghovbia hinted: “Owing to the richness of farming in Nigeria, it is projected that the market has a potential to generate, at least, USD 600 million worth of agriculture insurance premium in a year, against the USD 10 million reported during year 2021.”
Agricultural Insurance is a policy which involves the insured (farmer) paying a little sum (premium), usually in percentage to an insurance company (insurer) to guarantee against loss due to any of the perils (death, flood, drought etc) covered for a particular period of time (usually not more than one year) with a promise to indemnify (pay back the value of loss) should such occur.
“Sadly, this undertaking is undermined by the limited investments in the sector, and the uncertainties resulting from the effects of climate change,” Mr. Aghoghovbia frowned.
He then assured: “With sustained pressure on food security, arising from the increasing population and the government’s push to diversify the economy, agriculture will continue to be a key area of focus for many years to come.
Africa Re in Capsule
Africa Re is the foremost regional reinsurance institution dedicated to the African continent and open to select markets in Asia, Brazil and the Middle East. The reinsurance institution has unique local expertise in offering security to clients, with strong capitalisation and A-grade international ratings supporting its bespoke reinsurance solutions.
The specialty insurance company prides itself with fostering the development of the African insurance industry.
Africa Re provides capacity and assistance through first class reinsurance protection to its clients.
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