The government is working on modalities to develop a conducive environment for the growth and development of an agricultural insurance policy to cushion farmers from the ravages of natural disasters and calamities.
The policy will provide a framework for availing agricultural insurance in the country due to the fact that insurance uptake and penetration in the sector remains less than 1 percent.
Ag. Director, Agriculture Policy Research and Regulations at the Ministry of Agriculture Peter Owoko announced that the Government had identified and adopted agricultural insurance as one of the ways to cushion farmers against the risks and reduce vulnerability of farmers.
Speaking during a workshop on innovation in Agricultural Risk Management in Kenya, he underscored the need for innovations in product development and distribution.
He however said agricultural insurance in Kenya was an emerging line of business and over the past few years there was growing interest in the sector the attracted a number of insurance service providers offering various products for both crop and livestock sub-sectors.
“There are two broad categories of Agricultural insurance in Kenya namely the indemnity-based insurance and index-based insurance and this country has had a relatively long history of indemnity based agricultural insurance”, Owoko said .
He noted that although currently all general insurers are licensed to underwrite agricultural insurance, by 2020 there were only eight companies underwriting agricultural insurance showing that the level of Agricultural insurance uptake and penetration is still very low in Kenya.
Owoko acknowledged that Agricultural insurance is regulated under the Insurance Act Cap 487 as a sub class of Miscellaneous insurance under general insurance business and this kind of classification has made it difficult to specifically target interventions geared towards increasing penetration of agricultural insurance in the country.
“There is no legislation to specifically support development of agricultural insurance despite its unique nature from product development, distribution and claims management. This is considered a major disincentive for private insurers to venture into agricultural insurance given its risky nature”, he noted.
The operating environment has also not been sufficiently enabling for development of agricultural insurance and for this reason, Owoko said agricultural insurance remains underdeveloped with limited participation of private insurers as farmers continue to be exposed to agricultural risks.
He called upon product developers to be innovative in the products that are being released into the market by ensuring that the product is affordable to the policyholder and at the same time allow the insurer to be able to carry the risk.
He also explained that the insurance sector for a long time has depended on the use of agents to distribute their products and this approach may not work optimally for the farmers who are spread across the country and have small pieces of land.
“Farmers should be able to access insurance products with least cost; for example can these farmers be able to access insurance from the comfort of their house using appropriate applications on their mobile phones, or can they access these products from the local retail shop. I believe that innovations in these will go a long way in increasing penetration of Agricultural insurance as a risk management strategy in the country’, Owoko said .
Kenya in the last three years has been undertaking a three year research on the crop insurance and the project which has seen partnerships of Kenya Agricultural Livestock and Research Organization, (KALRO) Agriculture and Climate Risk Enterprise (ACRE) Africa, International Food Policy Research Institute (IFPRI) and Wageningen University & Research (WUR), from Netherlands has been engaging over 7000 farmers from 7 Counties in using Digital Platform To Insure Crops.
The project under a new model –Picture Based Insurance (PBI) has been championed by local and international agriculture researchers and development partners and farmers were only required to take images of crops damaged and share with their insurers.
Lillian Waithaka from Acre Africa said the picture based insurance project has been there since 2019 and now that it is coming to a close there have been positive results that have seen about 7500 farmers uptake the innovative crop insurance products.
“ The farmers have built resilience, trust the products and are more willing to buy the insurance products compared to the conventional products that were used before “, she said
Waithaka further said that results have shown that more women were willing to take up the insurance product more than the men, they were also open to the technology because of using the smart photos and overall showing that women are the positive agent of climate change.
“ We have for the last three years been working with the women together with the youth all between 35 and 40 years as champion farmers to distribute the insurance to other farmers”, she said
“We started off with 200 champion farmers in 7 counties and we have started to expand and recruit more in the other bread basket counties and by the end of the year we project to have 1000 champion farmers”, she added.
Waithaka said their way forward as an organization is to expand their scope and look towards innovation that covers more risks that were not being covered before such as pest and disease unlike now where they were only covering drought and excess rainfall .
Carol Waweru of IFPRI said the concept of picture based project was first piloted in India before spreading to Ethiopia, Rwanda and now Kenya.
“In Kenya we implemented the project as we have complimentary risk management strategies where we offer insurance which is picture based and advisories through KALRO and further offer the drought tolerant seeds that are supposed to cushion farmers when there is climate change”, she said .
Through the picture based insurance, Waweru said they monitor the farm every two weeks , take pictures and from the photos and also the GPS coordinates they are able to monitor what is happening in the farms , either weeded or not , whether in rain or not and assess the farmers payout .
Francesco Cecchi , Assistant professor from Wageningen University & Research (WUR), in the Netherlands said the purpose of the project was to enhance and improve the resilience of small holder farmers around countries.
“We worked in Bungoma, Busia, Embu Tharaka-nithi, Meru, Makueni and Machakos and developed a project focusing of increasing access to drought tolerant varieties of maize , sorghum, green grams and beans and selling insurance product that is meant to be an improved version of what is commercially available picture based insurance”, he explained .
Cecchi said they developed an App “ Seed grow’ that farmers have been using to claim what they were farming by observing from germination on the same plot to harvest by taking photos that are easily observable by the Agronomists from KALRO..
Payout, he said depends on the sum insured and that the the standards product that were distributed had a maximum payout of 2000 shillings which is supposed to cover the cost of buying news seeds in the next season if ones crop was damaged
According to KALRO, Director General Eliud Kireger, livelihoods of millions of smallholder farmers across the developing world are under threat from extreme vagaries of weather due to climate change such as droughts, floods, heat waves, pests and diseases food production risks eventually farmers experiencing 100 per cent crop failure hence, the Picture Based Crop insurance project will assist farmers.
By Wangari Ndirangu
