An insurance scheme to completely insulate farmers from every foreseeable risk including rainfall and crop yield have been introduced by National Insurance Commission (NAICOM) in collaboration with Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL).
The scheme, which is tagged Index based agric insurance (IBAI) pays out benefits on the basis of a predetermined index for loss of assets and investments, primary working capital, resulting from weather and catastrophic events, without requiring the traditional insurance services.
Speaking on the scheme at seminar organised for insurance journalists by NAICOM in Benin City recently, Director, Inspectorate Department of the commission, Mr. Thompson Barineka said both the commission and Nigeria Insurers Association (NIA) have commenced discussions with NIRSAL for the purpose of introducing the service to farmers.
He described IBAI as a strategic initiative in Insurance penetration and contribution to the development of agriculture.
According to him, despite the hoopla about issuing low interest loan to farmers, they hardly get the loans even as significant portion of their harvests are lost due to modern preservation methods.
“The role NAICOM has played in the last couple of months in promoting access to Agric Finance and assurance of compensation on basis that are different from the conventional insurances to formers”, Barineka said while explaining that only the federal government owned Nigerian Agricultural Insurance Corporation (NAIC) provided insurance services to farmers before now.
He however, disclosed that NAICOM liberalised the market some years ago by licensing other insurance companies to provide unsubsidised agric insurance services to farmers.
According to him, IBAI will not require individual farmers to pay premiums directly as it would already be built into the funding provided by NIRSAL.
The Director said that already, experts have mapped out parts of the country and determined the various weather challenges likely to be faced by farmers and that once there is either inadequate or excess rainfall that will affect yield, farmers will be automatically entitled to compensation.
Introducing and promotion of the scheme he narrated, is NAICOM’s way of supporting government’s efforts to diversify the economy and also create opportunities to promote agribusiness and employment.
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