CEM REPORT, AGROFOOD | Nigeria generated over $10 million from Agricultural Insurance Premium in 2020. This places Nigeria in fourth position behind South Africa which generated the highest premium of over $100 million followed by Morocco and Botswana which generated $20 and $40 million respectively.
This is according to the latest edition of the Africa Insurance Pulse on food security and agricultural insurance.
The report stated that premium from Agricultural Insurance contributes 1.6 per cent of total non-life insurance premium generated in Africa.
The analysis stated that the agricultural insurance market in Africa was underdeveloped, with low penetration and a narrow variety of products, despite the economic significance of the agricultural sector to many African countries.
Agribusiness insurance, which regional insurers believe is essential to the region’s food security, has significant untapped potential, they added.
It however added that the market had been growing in recent years, driven by increased demand from farmers for risk management solutions and the development of new technologies and insurance models.
“In 2020, African agricultural insurance premiums were estimated at USD 320 million, representing 1.6 per cent of total African non-life insurance premiums of USD 19,730 million. Despite being slightly higher than the global share of 1.3 per cent there is a large untapped potential.”
The report states that the United States and China currently account for more than 50% of the worldwide market for agriculture insurance premiums, with annual premium volumes of $15 billion and $12 billion, respectively.
The global market for agricultural insurance is expanding, the research claims, notably in Africa. It continues, “The global agricultural insurance market has grown significantly due to the increasing need for risk management tools in agriculture.”
African Insurance Organisation (AIO), Secretary General, Jean Baptiste Ntukamazina said that agric Insurance acts as a safety net for farmers and food producers by transferring the financial risk of production or distribution to the insurance sector.
“Agricultural insurance is critical to promoting food security in Africa. It acts as a safety net for farmers and food producers by transferring the financial risk of production or distribution to the insurance sector.
“This stabilises food production and increases resilience to disasters. In addition, insurance provides incentives for sustainable practices such as conservation agriculture and crop diversification, thereby improving food security. Insurance also helps facilitate investment in new technologies and infrastructure, ultimately increasing agricultural productivity.”