Farmers in Nigeria will henceforth have good access to insurance coverage as the National Insurance Commission (NAICOM), is championing the course of a specialised and inclusive agric insurance scheme tagged Index based agric insurance(IBAI).
The IBAI is an innovative and specialised insurance scheme that pays out benefits on the basis of a predetermined index (e.g. rainfall level, crop yield) for loss of assets and investments, primarily working capital, resulting from weather and catastrophic events, without requiring traditional insurance services.
The commission is currently planning to collaborate with the authority of the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) for the purpose of ensuring the workability of the index based insurance scheme.
Both the commission and the umbrella body of insurance underwriters, the Nigeria Insurers Association (NIA), have opened up discussions with NIRSAL for the purpose of rendering this much needed financial services to farmers in Nigeria.
Speaking on the scheme at a media seminar organised by NAICOM for journalist in Benin, Edo State, the Director Inspectorate department of NAICOM, Mr. Thompson Barineka, said that IBAI is a special scheme evolved to support farmers in Nigeria as he noted that farmers in Nigeria hardly get loans despite the emphasis on low interest rate for farmers in Nigeria made by banks.
He noted that Nigerian farmers suffer a lot due to the perishable nature of their produce and lack of modern preservation methods.
He said that before now, only the federal government owned Nigerian Agricultural Insurance Corporation (NAIC) was licensed to provide agricultural insurance services mainly due to availability of Federal Government subsidies but that NAICOM a few years ago liberalised the market by licensing other insurance firms to provide unsubsidised agric insurance scheme to farmers.
He said by introducing and promoting the scheme, NAICOM is keying into the ongoing efforts by the present administration to diversify the Nigerian economy and create opportunities to promote the Agriculture business as well as boost employment numbers in the last few years.
The role NAICOM has played in the last couple of months in promoting access to Agricultural Finance and Assurance of compensation on basis that are different from the conventional insurances to farmers.
He described the scheme as a strategic initiative in Insurance penetration & contribution to the development of Agriculture in Nigeria, adding that IBAI is a programme in support of the the Federal Government’s policies.
Speaking on the workings of IBAI, Barineka, said traditionally, when risks or a loss event such as a major drought, epidemics or other hazards affects a large population all at the same time or small rural farmers, and often in difficult circumstances, even over a relatively small area or region, assessing the losses of each individual insured party that is affected is not feasible.