Agric Insurance to Yield $600m Premium to Insurers Annually
International reinsurer, Africa Reinsurance Corporation (Africa Re.) has said that Nigerian insurance sector has the potential to generate at least $600 million premium from Agricultural insurance annually.
This is against $10 million premium reported last year.
This means that Nigeria has a gap of N590 million untapped insurance market in created by the richness of farming in Nigeria.
Deputy Managing Director/COO, Africa Reinsurance Corporation, Ken Aghoghovbia, said this in his opening remarks at the 2022 Africa Re. Agriculture Insurance Workshop held in Lagos.
He stressed that these bright economic prospects, provided huge opportunities for insurance companies to innovate and provide risk transfer solutions to cover the inherent risks associated with farming activities.
He noted 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.
According to him, 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 in many years to come.
He however added that this undertaking was undermined by the limited investments in the sector, and the uncertainties resulting from the effects of climate change.
Aghoghovbia maintained that since 2017, the agriculture class of business has generated a lot of interest from several market players noting that 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).
He stated that the prominence of smallholder farmers in Nigeria’s food production systems dictated 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.
“Therefore, our team endeavors to work with like minded 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,” he stated.
He noted that Africa Re was deliberate about leveraging its wide range of expertise and knowledge, backed by solid financial strength, to provide the much needed reinsurance capacity in the agriculture sector, stating that over the last five years, the market has seen exponential growth in insurance premiums from agriculture, but noted that the growth has been overshadowed by the unfavorable loss experience.