Insurance Companies in Nigeria and Africa have acquired capacity to underwrite agribusiness towards the support for food security in the continent following a partnership deal between Africa Reinsurance Corporation and IFC, a member of World Bank Group, DMD/COO Africa Re, Ken Aghoghovbia has said.
In a statement, he added, "In order to address the challenges depriving African insurance from investing in agric space, the IFC’s Global Index Insurance Facility (GIIF) set up an experience account whereby the loss ratios of the net account for local risk carriers would be capped at 75 per cent and the excess loss amounts transferred to the Global Index Insurance experience account, with Africa Re as the fund administrator."
Aghoghovbia said IFC/GIIF fund, which Africa Re manages on behalf of the agriculture industry stakeholders aligns well with its mission statement of fostering the development of insurance and reinsurance industry in Africa.
The Global Index Insurance Facility (GIIF) is a multi-donor program managed by the World Bank Group created to address the scarcity of affordable insurance protection against weather and catastrophic risks in emerging countries.
GIIF is supported by the European Commission, the African, Caribbean and Pacific (ACP) Group of States, the Netherlands Ministry of Foreign Affairs, the German Federal Ministry of Economic Cooperation and Development (BMZ), and the Japan Ministry of Finance
He said the pilot phase of the experience account was set up in 2017 for a 3-year period to end in December 2020, with $900,000 fund covering Nigeria and Zambia and, "was intended to support the development of weather and area yield index insurance programs in these countries.
"During the last 3 years, the experience account fund has been triggered twice with two risk carriers, Mayfair Insurance Company (Zambia) and AXA Mansard Plc (Nigeria) benefiting in 2019 from the fund following various flood losses that impacted their net account portfolios.
"While in 2020, the Nigeria market was again hit by flood losses that affected 8 local risk carriers on the CBN Area Yield Index Anchor Borrowers Program (Wet Season) for rice, maize and cotton crops. The total market gross claim was N1.996 billion, approximately $5 million and the local insurers that covered the risk include Veritas Capital, Leadway Assurance, AIICO Insurance, AXA Mansard Insurance Plc and Royal Exchange Insurance Plc."
"Africa Re on its own paid about $1.5 million to the lead insurer as their reinsurance share of the claim and has handed out a total of $827,000 to the […]