Old Mutual scales up drought insurance cover for small holder farmers

Old Mutual scales up drought insurance cover for small holder farmers

By Insurance24

HARARE, Zimbabwe’s largest integrated financial services group, Old Mutual says will during the 2018/19 agricultural scale up the drought insurance cover for small holder farmers having successfully piloted the product during the last two seasons.

The product was in partnership with Blue Marble Micro Insurance, which is owned by eight international insurance giants with Old Mutual Group being the partner in Africa.

Old Mutual Managing Director Donald Muthe told Insurance24 that in 2019, the company will be insuring more people as well as covering other products.

“In Zimbabwe, we call it Ruzhowa, we conducted a 2 year pilot started which during 2016/17 season and the 2017/18 so we now know what is required and in 2019 we will be insuring more people,” he said.

He said during the pilot phase, there was only one product which was maize but we are now moving into other crops, with new partners such as seed companies.

Muthe said the pilot had really confirmed the risks faced by small scale farmers. He said during the frost year, the rainfall patterns were good, thus no claims were paid, however during the 2017/18 season, some farmers were affected by the rains which came late, whilst when they came they destroyed some crops, thus made some claim payments.

Zimbabwe has an agro based economy with small scale farmers playing a significant role. The micro insurance product provides insurance against seasonal droughts. The product offers protection through farmer’s largest investment that is inputs such as seed and fertilizer.

Other services offered through the product include customer experience through mobile phones and valuable farming education based on climate data to inform planting decisions.

   

Meanwhile, during the 2017 financial year, the Group’s Life business performance declined 5% due to higher weather related claims and private motor book costs.

Overall, the group posted a solid performance with adjusted operating profit growing 25% to $95.5 mln, with total revenue excluding investment return going up 7% to $351.1 mln. Loans and advances went up 15% to $669.2 mln while expenses increased 5% to $93.8 mln.
Chief executive officer Jonas Mushosho said Non life sales increased 17% to $318.5 mln while non life sales were 5% lower at $19.4 mln. Funds under management surged 50% to $2.7 bln while net client cash flows closed the year at $95.6 mln, which was 17% higher.

The Life Assurance gross written premium increased 6% to $160.3 mln from $151.9 mln resulting in an adjusted operating profit of $31.2 mln up 43% from $21.8m in 2016.

Life policyholder funds went up 52% from $964.6m to $1,462.2m while Net Client Cash Flows up 8% up from $44.0m to $56.6m.

General insurance saw profitability declining 12.5% from $6.8m to $5.95m while the  Net earned premium went up 5% from $28.3m to $29.7m. The unit’s underwriting profit ratio was down from 18% to 13% due to higher claims but the expense ratio maintained at 23%.

However, gross premiums for both life and short term insurance grew 5% to $194.8 mln from $185.4 mln in prior year due to a combination of improved client retention and new business underwritten.