The government is working on how to develop an enabling environment for growth and developing an agricultural insurance policy to protect farmers from the ravages of natural disasters and calamities.
The policy will provide a framework for the use of agricultural insurance in the country due to the fact that underwriting and insurance penetration in the sector remains below 1%.
Ag. Director of Agricultural Policy Research and Regulation at the Ministry of Agriculture, Peter Owoko, announced that the government has identified and adopted agricultural insurance as one of the means to protect farmers against risks and reduce their vulnerability.
Speaking at a workshop on innovation in agricultural risk management in Kenya, he stressed the need for innovation in product development and distribution.
He however said that agricultural insurance in Kenya is an emerging business sector and that in recent years there has been growing interest in the sector which has attracted a number of insurance service providers offering various products for the crop and livestock sub-sectors.
“There are two major categories of agricultural insurance in Kenya, namely indemnity-based insurance and index-based insurance, and this country has a relatively long history of indemnity-based agricultural insurance,” said said Owoko.
He noted that although currently all general insurers are allowed to underwrite agricultural insurance, in 2020 there were only eight companies underwriting agricultural insurance, which shows that the level of underwriting and penetration of the agricultural insurance is still very weak in Kenya.
Owoko acknowledged that agricultural insurance is regulated under the Insurance Act Cap 487 as a sub-category of miscellaneous insurance under the general insurance business and this type of classification made it difficult to specifically target. interventions aimed at increasing the penetration of agricultural insurance in the country.
“There is no legislation to specifically support the development of agricultural insurance despite its unique nature of product development, distribution and claims management. This is seen as a major deterrent for private insurers to venture into agricultural insurance given its risky nature,” he noted.
The operating environment has also not been conducive enough for the development of agricultural insurance and for this reason, Owoko said that agricultural insurance remains underdeveloped with limited participation from private insurers as farmers continue to be exposed to agricultural risks.
He called on product developers to innovate in the products that are launched in the market by ensuring that the product is affordable for the insured and at the same time enabling the insurer to be able to bear the risk.
He also explained that the insurance industry has long depended on using agents to distribute their products and that this approach may not work optimally for farmers spread across the country with small plots of land.
“Farmers should be able to access insurance products at the lowest cost; for example, can these farmers access insurance from the comfort of their home using appropriate apps on their mobile phones, or can they access these products from the local retail store. I believe that innovations in these areas will go a long way in increasing the penetration of agricultural insurance as a risk management strategy in the country,” Owoko said.
Over the past three years, Kenya has undertaken a three-year crop insurance research and project which has seen partnerships between the Kenya Livestock and Agricultural Research Organization, (KALRO) Agriculture and Climate Risk Enterprise (ACRE) Africa, International Food Policy Research Institute (IFPRI) and Wageningen University & Research (WUR) of the Netherlands have engaged over 7,000 farmers from 7 counties to use the digital platform to insure crops.
The project under a new model – Picture Based Insurance (PBI) was championed by local and international agricultural researchers and development partners and farmers were only required to take pictures of damaged crops and share them with their insurers .
Lillian Waithaka of Acre Africa said the image-based insurance project has been around since 2019 and now that it is coming to an end, there have been positive results which have seen around 7,500 farmers adopting the innovative products of crop insurance.
“Farmers have built their resilience, trust the products and are more willing to buy the insurance products compared to the conventional products that were used before,” she said.
Waithaka further said that the results showed that more women were willing to take up the insurance product more than men, they were also open to technology due to the use of smart photos and overall show that women are the positive agent of climate change.
“For three years, we have been working with women and young people, all between the ages of 35 and 40, as champion farmers to distribute the insurance to other farmers,” she said.
“We started with 200 Champion Farmers in 7 counties and we have started to expand and recruit more in the other breadbasket counties and by the end of the year we expect to have 1000 Champion Farmers “, she added.
Waithaka said the way forward as an organization is to expand its reach and look to innovation that covers more risks that weren’t covered before, such as pests and diseases, unlike now. where they covered only drought and excessive rainfall.
IFPRI’s Carol Waweru said the image-based project concept was first tested in India before spreading to Ethiopia, Rwanda and now Kenya.
“In Kenya, we have implemented the project as we have complementary risk management strategies where we offer image based insurance and advisories through KALRO and additionally offer the drought resistant seeds which are supposed to protect farmers in the event of climate change,” she said.
Using image-based assurance, Waweru said they surveyed the farm every two weeks, took photos and from the photos and also GPS coordinates, they were able to monitor what was going on in the farms whether they are weeded or not, whether it is raining or not and assess the payment of farmers.
Francesco Cecchi, assistant professor at Wageningen University and Research (WUR), the Netherlands, said the aim of the project was to strengthen and improve the resilience of smallholder farmers across countries.
“We have worked in Bungoma, Busia, Embu Tharaka-nithi, Meru, Makueni and Machakos and developed a project to increase access to drought-tolerant maize, sorghum, chickpea and bean varieties and sell an insurance product that is supposed to be an improved version of what is commercially available in image-based insurance,” he explained.
Cecchi said they had developed a “Seed grow” app that farmers used to claim what they were growing by observing from germination on the same plot to harvest by taking photos that were easily seen by KALRO agronomists.
The payment, he said, depends on the sum assured and that the standard product that was distributed had a maximum payment of 2000 shillings which is supposed to cover the cost of buying new seed next season if its crop was damaged.
According to KALRO, Managing Director Eliud Kireger, the livelihoods of millions of smallholder farmers in the developing world are threatened by extreme weather hazards due to climate change such as droughts, floods, heat waves, pests and diseases. percent crop failure, so the image-based crop insurance project will help farmers.
By Wangari Ndirangu