New plan designed to boost agriculture insurance cover

Dar es Salaam. The government has developed a five-year plan designed to specifically attract insurance companies into agriculture.

The plan by the Tanzania Insurance Regulatory Authority (Tira) comes against the backdrop of insurance firms’ reluctance to venture into agriculture despite the huge potentials of the sector which accounts for about 28 percent of the country’s Gross Domestic Product (GDP).

Available Tira figures show that it is only five out of 26 insurance companies in Tanzania that offer insurance products and services in the agriculture sector.

Known as the National Agriculture and Livestock Insurance (NALI) Scheme, Tira’s plan – which runs from 2021 to 2025 - intends to tweak the role of each player in agriculture insurance.

Key in the plan is how different players - including the government - can raise their involvement in agriculture insurance.

While the government will have to put good infrastructure in agriculture such as irrigation farming systems, insurance companies will have to commit themselves to offering different affordable products that reach large populations.

Insurers say they fail to venture into agriculture insurance due to the risks involved, aggravated by farmers’ poor understanding of the insurance business - and also a lack of agricultural professionals in insurance firms.

The plan is one of several being used by Tira in efforts to raise the contribution of the insurance sector to Tanzania’s GDP from the current 0.53 percent to three percent by 2023 - and five percent in 2024.

Tira also envisages achieving its goals through extending micro-insurance products and services to low-income earners, especially small farmers, traders and livestock keepers.

“We expect preparations for the National Agriculture and Livestock Insurance Scheme rollout to be completed so that it can be approved in the next financial year,” the acting Tira director for Planning, Research and Market Development, Mr Muyengi Zakaria, told The Citizen recently.

Under the plan, the government will also be responsible for a certain percentage of the risks as a way of building confidence in the plan in firms and prospective beneficiaries.

The move, he hopes, will attract both farmers and insurance firms. It will also entice commercial banks into issue loans to players in the agriculture sector.

Insurance firms agree that agriculture has a huge unexploited potential.

High potential

“We have logged our application to Tira requesting a licence to take a stake in its agriculture portfolio - and, hopefully, by December or January 2021, we will get approval from the Tira commissioner. The sector has a lot of potential,’’ the First Assurance chief executive officer, Rogatian Selengia, told The Citizen.

He said the company was able, willing and more than ready to engage in issuance of insurance services for both crop farming and animal husbandry. However, he noted that they were being hindered by lack of relevant statistical data, and unstable weather forecasts.

The manager of products development who is specifically attached to agriculture insurance at the Jubilee Insurance Company based in Dar es Salaam, Mr Hussein Nassoro, said the company started providing agricultural insurance in 2014 after seeing the opportunities in the sector.

In that case, he said, there is a real need for other insrance companies to jump on to the agriculture insurance bandwagon soonest.

The government, he said, has scrapped value-added tax (VAT) on insurance premiums that are paid to cover agriculture-related risks. This, he said, was another incentive for more companies to take up agricultural insurance. The company – which insures crops, livestock, poultry and forestry products – currently provides insurance cover to more than 21,000 farmers from 29 groups in the Manyara, Singida, Iringa, Dodoma, Songwe and Rukwa administrative regions on Tanzania Mainland.

Despite the assorted potentials in agriculture, there are indeed a number of challenges including lack of awareness on the importance of insurance among large populations; poor records by farmers which hold back the process of determining both the value and losses of insured property.

“Old farming is also a major challenge for insurance companies. The shortage of agricultural extension officers prevents companies from venturing into the sector,” he said.

Agricultural insurance would help people like Mr Meck Lyamuya, a resident of Morogoro Region, who found himself getting back to poverty when all his 70 pigs perished from a disease a few years ago.

“When I started rearing pigs in 2014, I had only 10 piglets. In 2017, the number of pigs had gone up to 100 - but, most unfortunately, in 2018 a disaster struck when a disease killed 70 of them,” he lamented.