Policy nears completion for agriculture insurance

Dar es Salaam. It is considered too risky to cover agriculture with insurance in Tanzania but the government and the service providers have never given up hope on the move.

As the companies prepare modalities of the service provision while assessing challenges, the government says it’s in the final stages of preparing the National Insurance Policy (NIP) that will help in providing guidelines on issues related to agriculture insurance.

Tanzania Insurance Regulatory Authority (Tira) Commissioner Baghayo Saqware said the guideline will probably help in promoting the agriculture insurance provision in the country.

“We need a national agriculture insurance policy because it will help the authority to know better ways of handling it,” he said.

Insurance companies consider agriculture risky because the sector is dominated by smallholder farmers who are often surrounded by many challenges such as vagaries of weather, insecure land ownership, difficulties in accessing capital and farm inputs, unfavourable trade policies and price fluctuations.

Many of those constraints are beyond the farmers’ control. Currently it’s only a few companies that are providing agriculture insurance and that is partly attributed to lack of policy and other factors including database. The crops insured include food crops such as maize, paddy, beans tobacco, coffee and tea.

The companies include National Insurance Corporation (NIC), UAP Insurance Company, MGen Insurance Company and Jubilee Insurance. Opening a seminar recently, the minister for Agriculture, Mr Japhet Hasunga, said the government recognised the contribution of the insurance, adding that they work to tackle all the obstacles that face insurance companies.

He said the challenges included lack of a crop database, national policy for agriculture insurance and weather changes. Mr Hasunga said by June, this year, all the databases for crops would be available to help insurance companies to start looking into the possibility of insuring them.

“On the issue of policy I am directing the commissioner of insurance to speed up preparations for databases so that we can hand them over to the Finance minister for other procedures,” he said.

Insurers prefer large scale farmers and call on the ministry of agriculture to sensitize farmers to form those groups.

MGen Tanzania Insurance Co Ltd, head of business process Lugano Mkisi told The Citizen that the company started insuring agriculture five years ago and it focuses in food crops and the entire value chain.

He said they provide insurance to farmers who are in groups and doing contract framing, adding the company insures risks like rain, pests, draught and diseases whereby in the case of loss due to that damage everyone will be refunded according to the loss.

“Currently we insure food crops such as maize, paddy and beans and the entire value chain of crops such as warehouses, from farm to market and farming staffs,” he said.

He said in agriculture insurance, education is needed to farmers so that they form groups and that could be easy for companies to insure. “We do not give insurance to individuals because of cost, and many farmers are cultivating a migrant farming.”

For his part the National Insurance Corporation (NIC) managing director Sam Kamanga said that the situation has changed so they must know what the market wants before going to agriculture insurance.

Mr Kamanga said they have not yet selected the kind of crops they will start with, but are trying to encourage farmers through their associations. “Our agriculture insurance proposal is still under Tira. We submitted three months ago so we are waiting for approval.”

He said the demand for insurance among farmers is very high.

First Assurance CEO Bosco Bugali is planning this year to introduce agriculture insurance and will start with cotton and tobacco.

“Currently our company is not underwriting this class of insurance because we are still pondering about the challenges facing this product,” he said.

Mr Bugali added they opted for tobacco and cotton because are structured and cultivated in large scale hence it’s easy to insure, adding that agriculture sector is important to the economy.