Re/insurance supervisors and players in Sub-Saharan Africa have highlighted the success of agricultural index insurance in improving the region’s disaster resilience, as, they say, momentum for index insurance solutions continues to grow.
Speaking ahead of the 10th Consultative Forum on building disaster resilience amongst smallscale farmers through agricultural index insurance, Jonathan Dixon, FSB, Chair of the IAIS Regional Committee for Sub-Saharan Africa, said; “agricultural index insurance in Sub-Saharan Africa is gaining momentum.
“Insurance supervisors increasingly recognise the importance of ensuring that this cover is provided responsibly, especially because these initiatives affect the livelihoods of vulnerable small-scale farmers.
“It is thus important that the insurance is affordable, sustainable and provides value to the farmer.”
Mia Thom, Technical Director and Risk Theme Manager, Centre for Financial Regulation and Inclusion (Cenfri), added that further unlocking the potential of agricultural index insurance would be key to the region’s economic development; “Agricultural index insurance can contribute to a broader risk management strategy to build resilience, and enable farmers to take on productive risks to build economic opportunities.
“How to unlock this potential in an increasingly complex regulatory environment is a critical question facing many in our region. The consultative forum convenes relevant stakeholders to deepen our understanding of this environment and guide the discussions going forward.”
Earlier this year at the World Economic Forum in Davos, Imperial academics kicked-off a micro-insurance and index-insurance scheme, which launched in Tanzania with 50,000 newly insured farmers and aims to expand throughout Sub-Saharan Africa by 2020 – securing smallholder farmers by providing access to financial aid from investment capital.
This is just one of many such schemes that have used the new possibilities provided by insurtech and an increasingly tech-savvy consumer base to grow insurance penetration in emerging and developing markets.
Hannah Grant, Head of the Secretariat at the Access to Insurance Initiative (A2ii), a global initiative working to promote access to responsible, inclusive insurance, stressed that there’s “a real appetite to delve into the more concrete aspects of index insurance.”
And in the face of climate change and shifting geopolitical tectonics potentially creating high-risk scenarios of food and water scarcity in coming years, the demand for index and micro insurance schemes is set to grow and save the food supply chain billions of dollars per year while creating large-scale demand for risk transfer to re/insurance.