Nairobi — Low insurance coverage penetration and excessive premiums are leaving thousands and thousands of Kenyan and different African farmers uncovered to local weather shocks, business gamers have warned, highlighting a rising disconnect between agriculture’s contribution to GDP and its insurance coverage protection throughout the continent.
Talking in the course of the Africa Reinsurance Local weather and Insurance coverage Workshop, Phocas Nyandwi, Regional Director at Africa Re, stated Africa contributes barely 2 p.c of world agricultural insurance coverage premiums, regardless of agriculture accounting for about 30 p.c of Sub-Saharan Africa’s GDP.
“Fewer than 17 p.c of farmers are insured, highlighting the already low penetration,” Nyandwi stated.
“This exposes farmers to shocks comparable to local weather change. Only a few folks perceive what agricultural insurance coverage entails and the way it can defend them from numerous local weather dangers. There’s additionally the problem of affordability — most farmers can’t afford the premiums,” he added.
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His remarks come as excessive climate patterns proceed to threaten Africa’s meals safety and rural livelihoods, with droughts and floods destroying crops and livestock in a number of areas.
Isaac Magina, Agriculture and Local weather Insurance coverage Lead at Africa Re, stated extra funding is required to strengthen the capability of underwriters to handle climate-related dangers.
“We now have seen a spike in climate-related occasions that expose farmers to shocks comparable to droughts and floods. We would like folks to remember and take motion,” Magina stated.
“Local weather insurance coverage continues to be a comparatively new idea, and most underwriters are within the formative phases. To insure local weather dangers, one must leverage many parameters, and most of our underwriters do not but have these capabilities.”
Magina famous that Africa Re is specializing in constructing technical capability inside the insurance coverage business to higher perceive and underwrite climate-related dangers.
Business specialists argue that scaling up agricultural insurance coverage is essential to cushioning farmers in opposition to local weather shocks and making certain meals safety within the area.
Nonetheless, excessive premiums, restricted consciousness, and weak coverage frameworks proceed to hinder progress.
In keeping with the Insurance coverage Regulatory Authority (IRA), Kenya’s complete insurance coverage penetration stands at about 2.4 p.c of the nation’s Gross Home Product — far under the worldwide common of round 7 p.c.
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Within the agricultural sector, insurance coverage penetration stays extraordinarily low, accounting for lower than 1 p.c of complete insurance coverage premiums.
The IRA attributes this to skepticism amongst farmers because of delayed declare settlements and lack of belief in insurers.
