The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL Plc), in collaboration with Royal Exchange General Insurance Company (REGIC), has developed the Hybrid Multi-Peril Crop Indemnity-Index Insurance (HM-II).
A statement from NIRSAL said the move will have a significant positive impact on agricultural productivity and assure income for farmers.
The new product, launched at NIRSAL’s Head Office in Abuja, is an outcome of NIRSAL’s commitment to the development of innovative agricultural insurance products and expanding coverage for agricultural lending across the entire agricultural value chain.
It is designed to protect farmers from losses during a planting season caused by bad weather (low & high rainfall, early & late season dry spells, lightning, hailstorms and thunderstorms), pest outbreak, disease outbreak, fire outbreak and permanent disability or death of the farmer.
A key advantage of the HM-II is that in cases where such risks happen, benefits paid out to the farmer would be up to the maximum loan or the insured amount after confirmation by advanced satellite technology, an assessment by an agriculture expert, or both.
The development of HM-II is in accordance with NIRSAL’s mandate to de-risk Agriculture and facilitate the flow of finance to the sector and aligns with the organization’s target of increasing distribution of existing and new Agric insurance products to 3.6 million farmers nationwide by 2026, of which, NIRSAL Plc has already reached a milestone of 1,476,289 smallholder farmers.
NIRSAL’s Managing Director/CEO, Aliyu Abdulhameed, who spoke during the launch event, revealed that the HM-II was piloted during NIRSAL’s participation in the Central Bank of Nigeria’s (CBN)2019 Anchor Borrowers’ Programme (ABP)Wet season farming.
He added that the new product is another step towards the development of the NIRSAL Comprehensive Index Insurance (NCII), conceptualised in 2018, with the ultimate goal of Agric insurance product development by factoring in commodity pricing parameters in the cover to be issued.
Towards achieving the NCII, the launch of the HM-II marks an improvement to the NIRSAL Area Yield Index Insurance (AYII) which the corporation developed in 2017 and piloted in the wet season farming of the same year to significant effect, covering17,000 farmers and 10,000 hectares with a harvest value of 3 Billion.
Specifically, NIRSAL Plc has been able to crowd in private insurance companies into the Agric insurance space via the formation of a consortium of four insurance companies in 2017 which has now grown to 10 insurance companies- including REGIC – in three years.
In his remarks, Yusuf Yila, Director of CBN’s Development Finance Department revealed that the CBN has adopted NIRSAL Plc’s Area Yield insurance (AYII) products and looks forward to deploying the HM-II.
He went on to commend NIRSAL Plc for always being at the forefront of agribusiness innovation and encouraged the company to continue on its upward trajectory. Yila concluded by expressing his confidence that NIRSAL Plc will continue to play a key role in the development finance functions of the CBN, it’s owner.
He ended by thanking NIRSAL Plc for “the exceptional job being done to change the face of agriculture financing in Nigeria” and for giving REGIC the opportunity to partner with it on the HM-II.
On his part, Sunday Thomas, NAICOM’s Commissioner for Insurance/CEO, who was represented by NAICOM’s Director of Policy & Regulation, Leonard Akah, stated that in line with the Federal Government of Nigeria’s (FGN) Financial Inclusion Strategy, NAICOM was eager to lend its support to the development of a product such as HM-II.
Furthermore, he noted that in order to support the federal government’s efforts in the promotion of agriculture and economic diversification, partnerships such as the one between NAICOM, NIRSAL PLC and REGIC- a partnership he described as visionary- have become inevitable.
In addition to developing new innovative insurance products along the entire Agric value chain, NIRSAL Plc is driving the enlightenment of different categories of Agric Value chain actors on Agric Insurance and training insurers & risk officers on innovative Agric Insurance product design and farm/agribusiness assessment.