The uptake of agriculture insurance is still low in Kenya and other African countries. This revelation was made during a recent webinar on “The Digitization of Agriculture Insurance Through Parametric Solutions” hosted by Allianz Africa in partnership Allianz Re.
The slow uptake has been attributed to a lack of knowledge and information about these insurance products. Insurance companies are however investing in insurance agriculture and conducting training with farmers to showcase its benefits.
Speaking during the webinar, Delphine Traoré, COO of Allianz Africa, noted that there is an ever-increasing need to invest in agriculture, given the vital importance of agriculture as a food source, especially in view of the increase in global population.
‘’Indeed, agriculture production makes up a substantial portion of the continent’s GDP in Africa, yet only a small portion of the producers are insured. Raising awareness of the vital role that agriculture insurance plays in sustaining agricultural production is a key step to increasing insurance penetration in the sector.’’
“Allianz Africa aims to contribute towards closing the protection gap and position itself as a leading agriculture (re)insurance provider on the continent,’’ Delphine added.
In addition, climate risks increase the need for investments to make agriculture more resilient, following the panel’s experts. They agreed that the development and commercialization of agriculture require financial services that can support. To this end, agricultural insurance is strategically important for eradicating extreme poverty, boosting prosperity and protecting livelihoods.
In 2020, the insurance industry recorded a cumulative premium of approx. 300mn USD from agricultural insurance. The Southern and Eastern regions of Africa contributed more than 80% of the recorded premium.
Eastern Africa recently recorded an improvement in its trajectory. Reto Schneider, Regional Head of Agriculture at Allianz Re stated that “the agricultural sector in the insurance industry could reach the potential of 1bn USD within 10 years, provided that penetration can be substantially increased.”
During the webinar, parametrics solutions were presented as the direction for the future. They bring a number of advantages such as high accuracy with state-of-the-art satellite information, hybrid products to address additional perils, increased efficiency through fully paperless processes, fast and automated payouts possible, high level of traceability, combination with loans and integration of the value chain.
Despite certain limitations, “technology is closing the gap between indemnity and parametric crop insurance and allows to get the best of both worlds in a single product”, Gregoire Tombez, CEO of WARM Consulting Group Ltd and Co-founder of GreenTriangle stated.
To have a reliable parametrics system that provides efficient solutions, the panel emphasized the necessity to bring significant improvements through product suitability, affordability, value chain efficiency, distribution, information and training.
This webinar was the second of a series aiming at sharing with stakeholders pan African solutions that the Allianz Group can offer through its footprint in Africa, by extending to the continent its expertise as a worldwide insurance leader.