The federal government should as a matter of urgency liberalise the agricultural insurance space to allow more companies undertake agric insurance.
Dr. Adelaja Adesina, Managing Consultant, Bdellium Consult Ltd who made this assertion, said that if 60 per cent of the nation’s Gross Domestic Product is from agriculture, why limit the business to only three or four insurance companies?
According to Adesina, government should extend 50 per cent subsidies to all agric insurance companies and not just to Nigeria Agricultural Insurance Corporation, NAIC, and premium subsidies given by Government should be for all agric insurance companies. He however charged insurance practitioners to understand the value chains and know when to outsource critical components to qualified and experienced professionals. Adesina said, “Insurance companies should outsource the fieldwork and management of agric and agric related projects to reduce staff overhead costs. Insurance firms need data to function effectively, such as rainfall and yields data, etc. Insurers must invest in infrastructure, satellite imagery, softwares for agric solutions, etc.”
According to Adesina, the insurance industry can be the vehicle to drive the agricultural potentials of the country, hence must understand and build capacity for agribusiness as well as have agric desks managed by qualified and experienced professionals who understand the different spectra of agribusiness. He said, “There must be collaboration with other professionals in the various fields of agriculture as well as outsource the technical side to people or companies that have the know-how. Insurance firms are already outsourcing HR, engineering, etc, why not agribusiness?
Agricultural insurance must be modelled and designed to take cognizance of the peculiarities of each type of Agribusiness.” On value proposition to customers, Adesina charged insurers to ensure that the customers should be aware of the benefits of insurance even as there is need for public enlightenment and customer education.
“Insurance companies understand insurance business, they must now try to understand agribusinesses. It is important to have a clear understanding of the risks involved and insurance firms must understand these risk mitigation measures, insurance premium can then be appropriately priced. Premium discounts can be given to stakeholders who have taken risk mitigation measures while agric risk management should be the focal point, not just the payment of premium and claims settlement.”
Adesina said that premium subsidies by governments is a global practice to support agriculture, hence there should be premium subsidy in Nigeria too. “Agric insurance in Nigeria should be driven by premium subsidies given by government. Loss adjustments for agribusiness is totally different from regular loss adjustment, as such, loss adjusters must understand the peculiarities of the different scenarios.” He stressed that insurance companies must pay claims as that is the most important story to farmers and other players in agribusiness.