FG to provide policy cover to farmers through index-based agriculture

The National Insurance Commission (NAICOM), in partnership with the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL), has revealed plans to protect farmers from every foreseeable risk involving rainfall, and crop yield in their various farming operation in Nigeria.

The scheme, which is tagged, Index Based Agric Insurance (IBAI), pays out benefits on the basis of a predetermined index for loss of assets and investments, primary working capital, resulting from weather and catastrophic events, without requiring the traditional insurance services.

Speaking on the scheme at seminar organised by NAICOM in Benin, Edo State, the Director, Inspectorate Department, Thompson Barineka, said both the Commission and the Nigeria Insurers Association (NIA), have commenced discussions with NIRSAL for the purpose of introducing the service to farmers.

He explained IBAI as a strategic initiative in insurance penetration and contribution to the development of agriculture, saying that despite the measures made to grant low interest loan to farmers, they hardly get the loans even as a significant portion of their harvests are lost due lack of modern preservation methods.

“The role NAICOM has played in the last couple of months in promoting access to Agricultural Finance and assurance of compensation on basis that are different from the conventional insurances to formers,” Barineka said.

He noted that only the Federal Government-owned, Nigerian Agricultural Insurance Corporation (NAIC), provided insurance services to farmers before now, but NAICOM liberalised the market some years ago by licensing other insurance companies to also provide these services.

According to him, IBAI will not require individual farmers to pay premiums directly, as it would already be built into the funding provided by NIRSAL.

The Director said already, experts have mapped out parts of the country, and determined the various weather challenges likely to be faced by farmers, and once there is either inadequate or excess rainfall that will affect yield, farmers will be automatically entitled to compensation.

He said the introducing and promotion of the scheme is NAICOM’s way of supporting government’s efforts to diversify the economy, and also create opportunities to promote agribusiness and employment.

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