Nigerian-based firm Continental Reinsurance will now offer agricultural insurance cover in its latest product mix, entering a class that has experienced high loss ratios in markets such as Kenya.
The Nigerian-based re-insurer, with operations in Kenya, said the continent has a high potential to grow its agricultural sector which will require more insurance products.
“We have read the signals of our environment and have responded without a doubt. In line with our organising principle of localisation, we have found it imperative to expand our product relevance to further build on market development,” said group CEO Femi Oyetunji.
The cover will help deepen Kenya’s agricultural insurance where annual gross written premiums are below Sh1 billion.
Only 10 out of the 54 insurers currently offer cover for crops and livestock in an economy where at least a third of the GDP is hinged on agriculture.
Agriculture insurance’s loss ratio, a measure paid claims as a percentage of premiums earned, has been high, hitting 97 per cent last year. Crop insurance had 121 per cent while livestock cover had 83 per cent.
Continental Re wants to strengthen internal capabilities to underwrite Agriculture insurance in Kenya and across the continent. Global agricultural premiums are about $25 billion but Africa’s share is less than one per cent.
“We are building best in class internal capabilities and capacity to underwrite Agriculture insurance led by an agricultural economist, Evance Rabong’o, who brings on board a deep passion and commitment, “said Dr Oyetunji.
Globally, less than 20 per cent of smallholder farmers currently have agricultural insurance cover. This is less than three per cent in sub-Sahara Africa.
The reinsurer’s Nairobi office serves the Eastern market region which comprises Kenya, Burundi, Djibouti, Egypt, Eritrea, Ethiopia, Rwanda, Somalia, South Sudan, Seychelles, Tanzania and Uganda.