Agric low-hanging fruit for insurers, says IPEC

Michael Tome Business Reporter

The Insurance and Pensions Commission (IPEC) says it has identified agriculture insurance as a low-hanging fruit through which Zimbabwe can accelerate the insurance penetration rate and also help advance the food security sustainability agenda.

Zimbabwe’s insurance industry is gearing up for increased uptake of agriculture insurance products given the growing negative impact of increasing and unpredictable seasonal differences and natural disasters.

As it stands, Zimbabwe and Africa at large need to reinforce preparedness against natural catastrophes to minimise the undesirable impact of extreme weather conditions.

Since the beginning of the year, possible partnerships aimed at building a market for agricultural insurance products have been announced, with a focus to cushion smallholder farmers in Zimbabwe from the impacts of weather-related crop damage and other shocks.

Agriculture remains the mainstay of the Zimbabwean economy and according to the Food and Agriculture Organisation (FAO), it accounts for circa 17 percent of the economy and generates 60 percent of total export earnings, meaning it is prone to the effects of the now unpredictable weather patterns, hence negative impact on the country’s income.

Speaking at the Women in Insurance Zimbabwe (WIZ) annual symposium recently, IPEC Commissioner Dr Grace Muradzikwa said gone were the days of selling traditional insurance without assessing the changing demographics and leveraging on digital and innovation.

“It is true that we cannot talk about an empowered continent without talking about food sustainability and agriculture’s share of insurance is below three percent. Thus agriculture is low-hanging fruit for all of us as we try to climate-proof agriculture and ensure food sustainability.

” . . . what is glaring are the low penetration ratios experienced in Africa. We need to adapt to the fast-changing world and leverage technology to achieve efficiencies and improve insurance penetration,” said Dr Muradzikwa

In this regard, there is a growing need to come up with mitigatory measures that allow farmers to protect their farm production and yields against natural disasters.

African Risk Capacity (ARC), a specialist insurance company established by the African Union earlier this year, intends to work with the local insurance industry, insurance brokers and reinsurers, with an overall goal of enhancing the affordability of agriculture insurance products to the generality of the local population.

Last week approximately 200 hectares of wheat were destroyed by fire countrywide causing extensive damage and compromising farmers’ financial security where they are not insured.

The local farming community thus requires flexible and tailor-made short-term insurance solutions to move from a reactive approach to preparedness in case of disaster occurrences

Local agriculture economist, Cristian Chikomo said climate change had been a major threat to farmers in recent years, therefore a need to improve crop insurance and expand coverage where needed.

“It is critical that crop insurance remains affordable, effective, viable, and adaptable. This ensures that farmers have a risk management plan to prepare for unexpected calamities and the confidence to plant again if disaster strikes,” said Mr Chikomo.

Agriculture insurance is considered a conducive and necessary tool that allows farmers to minimise some risk and have a small return if the weather goes against them.