Agriculture insurance slowly re-evolving…Insurers should do more on transparency

Agriculture insurance slowly re-evolving…Insurers should do more on transparency

By Insurance24

HARARE, Agriculture is as risky as any business.  The sector is prone to losses from natural disasters, thus as a result, farmers and insurance companies should co-exist in order to minimize the risk of losses.

In Zimbabwe, uptake of insurance services by farmer is generally low as farmers largely view insurance as an expense rather than a necessity to cover for future risk. But this has not been the case pre-land reform period as uptake was high. As a result, the land reform programme, Agriculture insurance uptake dipped as the new farmers did not value much into insurance.

However, there has been a new trend. The farmers are warming up to insuring their crops albeit on a cautious approach as many have fallen victims to dishonest insurers.  The Weather Index Insurance is now coming up and has been the most taken policy by farmers. This was said by Old Mutual senior business development manager, Immaculate Musonza at a Zimselector/IPEC mentoring programme for journalists where shoe also added that the new farmers need more encouragement and consumers education to appreciate the importance of agriculture insurance.

“Our farmers, our A2 farmers, we only insure when we think there is a risk, we only insure when we think we may lose something of which we will be defeating the purpose of insurance. With insurance, you have to insure every day, just like insuring your car, you cannot say, l think today ,l am going to have an accident so let me insure my car. You can’t do that, you’re not doing good to the industry, you are not doing good to yourself, she said.”

According to Musonza, there are three main types of agriculture insurance which are crop, livestock and agriculture assets. But she said most farmers are now partaking the weather index insurance which covers only inputs such as seed.

The first half of the 2017/18 agriculture season was characterized by a dry spell which saw a number of farmers particularly tobacco insuring their crops. A tobacco farmer from Mashonaland West told Insurance24 that upon getting information on the dry spell moved to insure his crop. He however noted that had it not been for the weather index, he wouldn’t have insured the crop due to the fraudulent nature of some insurers.

“This is something that these companies should address. As farmers we have been losing our money to some companies that you will never find in case of an eventuality,” he said.

Agriculture is a source of livelihood of more than 40% of Zimbabwe’s population. Insurance can play an important role in securing farmers’ livelihoods and boosting the efficiency of the agricultural sector. Ironically, levels of insurance in the farming sector in Zimbabwe are low.

According to Musonza, it is difficult to approach the farmers individually for insurance, but this is incorporated into the contracts they sign when they register as tobacco farmers. However, many could not have read the clause hence may feel they have been duped into entering the insurance contract.

Recently, the Tobacco Industry and Marketing Board (TIMB) told Insurance24 that only 3 companies we approved to provide insurance to farmer during the selling season as part of efforts to minimize fraudulent activities.

On other hand, in order to increase uptake of insurance into the agriculture sector, The Insurance Council of Zimbabwe (ICZ) working with government is targeting farmers under the Command agriculture framework to see how insurance can be incorporated.

Government has through the Command initiative supported farmers with inputs and other requirements valued over millions of dollars. ICZ Technical Administration officer, Nicholas Sayi during the same workshop indicated that they are engaged with government on the matter.

“We are discussing within the framework of command agriculture and trying to incorporate insurance into that, but this will be achieved through transparency and ICZ will be involved heavily into consumer education of the issue,” he said.

He added that the command aspect is not a compulsory nature but more from a business case and there is need for transparency in the transaction processes.

The insurance sector in Zimbabwe is highly developed and fairly diversified in comparison to most markets in the Sub-Saharan African region.