Farmers set to get insurance payout boost
Farmers are set to benefit from more compensation to help them recover from losses incurred due to vagaries of climate change, thanks to renewed efforts by government and stakeholders to develop a policy to increase agricultural insurance underwriting.
The compensation is further expected to trigger high food production and restore the entire agriculture sector.
Kenya Agricultural and Livestock Research Organisation (Kalro) Director General Eliud Kireger, said the livelihoods of millions of smallholder farmers across the developing world are under threat from extreme effects of climate change.
“Farmers are counting losses due to droughts, floods, heat waves, pests and diseases, sometimes experiencing 100 per cent crop failure. We have fast-tracked various insurance products, for instance, the Picture-Based Insurance (PBI) project to assist farmers seek compensation out of losses incurred,” he said.
The PBI has been championed by local and international agriculture researchers and development partners and farmers were only required to take images of crops damaged and share with their insurers.
A recent workshop on innovation in Agricultural Risk Management (ARM) in Kenya held at a Nairobi hotel, agriculture stakeholders emphasised on the need for innovations to enhance product development and distribution of the same.
Acting director in charge of Agriculture Policy Research and Regulations in the Ministry of Agriculture, Peter Owoko confirmed that the government is finalising the development of a national insurance policy.
Agricultural insurance
The policy, he noted once enacted will assist the government to provide a favourable environment for the growth and development of agricultural insurance in the country. “The policy will provide a framework for availing agricultural insurance in the country considering that agricultural insurance uptake and penetration in the country remains less than one per cent,” said Owoko
The government, he explained, has therefore identified and adopted agricultural insurance as one of the ways to de-risk the agricultural sector and reduce the vulnerability of farmers.
Agricultural insurance in Kenya, Owoko noted is an emerging line of insurance business and over the past few years there has been growing interest in uptake of the same.
Only eight companies underwriting agricultural insurance targeted crop and livestock sub-sectors by 2020.
Kenya in the last three years has been undertaking a three-year research on crop insurance and the project which has seen partnerships of Kalro and Agriculture and Climate Risk Enterprise (ACRE) Africa.
Other institutions include International Food Policy Research Institute (IFPRI) and Wageningen University and Research (WUR) from the Netherlands.
“There are two broad categories of agricultural insurance in Kenya namely the indemnity-based insurance and index-based insurance and this country has had a relatively long history of indemnity-based agricultural insurance,” Owoko said.
Claims management
He noted that agricultural insurance is regulated under the Insurance Act Cap 487 as a sub-class of miscellaneous insurance under general insurance business.
“There is no legislation to specifically support development of agricultural insurance despite its unique nature from product development, distribution and claims management. This is considered a major disincentive for private insurers to venture into agricultural insurance given its risky nature”, Owoko said.
Carol Waweru of IFPRI said the concept of picture-based project was first piloted in India before replicated in Ethiopia, Rwanda and now Kenya.
“In Kenya we implemented the project as we have complimentary risk management strategies where we offer insurance which is picture based and advisories through Kalro and further offer the drought tolerant seeds that are supposed to cushion farmers when there is climate change,” she said.
Lillian Waithaka from Acre Africa said the picture-based insurance project has been there since 2019 and now that it is coming to a close there have been positive results that have seen about 7,500 farmers uptake the innovative crop insurance products.
“The farmers have built resilience, trust the products and are more willing to buy the insurance products compared to the conventional products that were used before,” she said.
