IFC signs agreements to expand insurance to farmers in East Africa
All Africa, 24 November 2010
International Finance Corporation (IFC), a member of the World Bank Group, has signed agreements with three partners to expand access to insurance to thousands of farmers and livestock herders in Kenya and Rwanda to help protect their crops, animals, and livelihoods from weather-related risks and natural disasters.
IFC, through the Global Index Insurance Facility (GIIF), will confer grants totalling roughly $4.1 million to the Syngenta Foundation for Sustainable Agriculture/UAP Insurance weather index insurance initiative in Kenya; the International Livestock Research Institute (ILRI) Livestock index insurance project in northern Kenya; and the MicroEnsure weather index insurance project in Rwanda.
IFC’s GIIF programme was established in 2009 to assist the development of index-based insurance for natural disasters and weather risks in developing countries, where insurance is rarely available.
The grants will fund advisory activities, including local capacity building, infrastructure development, product development, and development of local insurance companies’ capacity to provide index-based insurance products.
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New weather stations in Ethiopia
IRIN Africa, 24 November 2010
New automated weather stations could boost Ethiopia’s fledgling agricultural insurance schemes, expanding the use of payouts triggered by abnormally low rainfall and reducing costly visual verification of yield losses.
Two insurance schemes have been set up recently in Ethiopia but they currently only have a few thousand policy-holders between them, which is fewer than 1% of all farmers in Ethiopia, and well short of the critical mass required to ensure long-term viability.
The new weather stations could improve their chances. The National Meteorological Agency has just set up 20 and another 30 are due to be installed by the end of 2010. The devices send real-time data to Addis Ababa via mobile phone and feed into the country’s national drought index.
"The stations will allow us to identify climate risks at an early stage and better protect vulnerable, food-insecure people in rural areas through innovative projects such as the weather risk insurance," said Felix Gomez, Ethiopia acting country director for the World Food Programme, which installed the stations.
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Swiss Re launches first agricultural product in Vietnam
Insurance News Net, 24 November 2010
High risk exposure to natural perils in Asia is driving microinsurance development for agricultural protection as international reinsurers and insurers recently introduced several programmes in South Asian countries where farming is a major export and economic activity.
Swiss Re has introduced the first index-based insurance programme in Southeast Asia for Vietnam Agribank Insurance Joint Stock Co., an insurance unit of Agribank, for protection of financial risks due to weather-related impact on farming production.
Swiss Re and Vietnam National Reinsurance Corp. jointly offer reinsurance protection for ABIC to cover loans to rice farmers in up to 10 provinces in Vietnam. "The insurance scheme will ensure Agribank can confidently offer rice loans and use potential payouts of the parametric insurance programme to mitigate the impact of credit defaults resulting from poor harvests," said Chief Executive Van Minh Nguyen in a statement.
Vietnam has high exposure to natural perils including droughts, floods and typhoons, and climate change may make rice harvests more volatile, said Nguyen. In the past, damage to agricultural production has affected up to 5% of Vietnam's gross domestic product. Rice is the most important crop in Vietnam, which is the world's second-largest exporter, contributing 20% of global tradable rice surplus.
Under the insurance programme, ABIC will insure Agribank's rice farming clients against inability to make loan repayments due to low yields. Payouts are defined by an independent area-yield index based on Vietnam Bureau of Statistics data.
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Insurers urged to explore microinsurance in Nigeria
Microfinance Nigeria, 23 November 2010
Insurance operators have been urged to reduce the level of poverty and suffering in the country through the development of microinsurance businesses which helps low-income earners mitigate their risks.
The Managing Director of Mutual Benefits Assurance Plc, Mr. Akin Ogunbiyi, while giving the admonition to practitioners in Lagos, stated that the Nigerian insurance industry is missing a great opportunity with regard to the microinsurance business as the potential is yet untapped.
According to him, one of the major fundamentals for a successful operation of microinsurance services include a large population, which Nigeria has in excess of 150 million people with skewed economic relations such that over 90 per cent fall into the category requiring this service.
Ogunbiyi, stated that insurance remains the most effective means of reducing the impact of diseases, theft, violence, disability, fire and other hazards.
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Access to Insurance Initiative seeking an Executive Secretary
The global Access to Insurance Initiative is looking for an Executive Secretary who will manage and guide the Secretariat and be responsible for the general, comprehensive project management (developing strategy and operational planning, budget and finance management, reporting, coordination, monitoring and evaluation) which need to be in accordance with the policies and procedures of the Initiative.
Click here for more information
Microinsurance sees growth opportunities in India, Indonesia and the Philippines
Reuters, 9 November 2010
India, Indonesia and the Philippines offer the biggest opportunities for the fledging microinsurance industry, which has a potential market of 3 billion people, industry officials said on Tuesday.
Microinsurance offers coverage for people with low incomes, including products such as life insurance, and is branching into areas such as offering farmers polices against extreme weather.
Over 140 million people, mostly in Africa and Asia, are now covered by affordable insurance premiums, and studies showed the potential market is up to 3 billion, the Munich Re Foundation and International Labour Organisation said ahead of a three-day microinsurance conference in Manila.
Craig Churchill, chair of the Microinsurance Network, said more than half of microinsurance products were focused on life and health while less than 10 percent cover farms.
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Slow growth for crop insurance in Kenya
World Countries, 8 November 2010
No one took them seriously but it appears small-scale farmers are now digging in for a big stake in the insurance industry. The introduction of insurance cover for crop failure promises to give farmers not only control of their farming, but could also turn them into a niche market for insurance companies groping for clients is a near-stagnant market.
The microinsurance cover was pioneered in Kenya through a collaboration between Syngenta Foundation for Sustainable Agriculture, UAP Insurance, Safaricom and 54 local agro-vets. Under the programme, too, are 30 weather stations, each covering a micro-climate of a maximum of 15-20km radius.
Suppliers sponsor half of the premium’s price, leaving farmers to pay 5 per cent on top of the cost of the inputs. The product debuted in Kenya in 2009 with a pilot project in Laikipia district. Ms Rose Goslinga, the project’s coordinator, says it involved 700 maize farmers who were insured against drought.
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Africa can make $25 billion from microinsurance
Microfinance Africa, 5 November 2010
A material impact to African economies of a potential income of about $25 billion can be made by microinsurance, the Managing Director of Africa Reinsurance Company Limited, Nigeria, Bakary Kamara, has stated. This is miles above the current income of $257 million, from 2008 figures.
There is therefore the need, Mr. Kamara stated, for governments, non-governmental organisations (NGOs), donors and regulated insurers to come together and leverage on their strengths to make an inroad and make profitable returns on this potential market.
According to him, a microinsurance potential customer base of 710.4 million is fair game in Africa, tasking insurers to take advantage of the situation. Mr. Kamara was delivering a paper on "The Role of Micro Insurance in a Developing Economy" at an insurance Forum to mark the 25th Anniversary of Star Assurance Company in Accra last week.
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'Three-in-one' microinsurance product planned in the Philippines
Business World Online, 7 November 2010
Regulators want to introduce a "three-in-one" product to the fledgling microinsurance market in the Philippines, capitalising on the Filipinos’ penchant for cheap, convenient products and to boost protection for the poor.
They are still at the stage of finalising the product, for now dubbed "Buhay, Bahay at Kabuhayan," but already have inquired if they can start developing and marketing it. "It’s a simple yet powerful product," said Joselito S. Almario, a director at the Finance department and deputy executive director of the National Credit Council, which the Finance department heads.
The product is designed to give PHP 10,000 ($232) coverage against death from accident or damage to property/business from natural calamities. One may buy three units for a total coverage of PHP 30,000 ($697), and a contract is good for a year.
The technical group that is working on "Buhay, Bahay at Kabuhayan" still has to compute the final premiums but these shall stick to the guidelines set in Insurance Memorandum Circular 1-2010 that states premiums on a daily basis must not exceed 5% of the daily minimum wage of non-agricultural workers in Metro Manila, which is currently at PHP 404 ($9.38) daily.
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Communicating with communities in Fiji: Microinsurance
Trading Markets, 29 October 2010
A diversity of community based organisations met to learn about microinsurance and help map the next steps forward for bringing the product to Fiji. The event was an information exchange and consultation, co-hosted by The Pacific Financial Inclusion Programme (PFIP), and the Asian Development Bank (ADB), with funding from AusAID. It was designed to assist these community based organisations in identifying several potential partners that are interested and capable of serving as distribution channels.
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A fifth of Allianz customers will be 'very low-income' by 2020
Post Online, 29 October 2010
Michael Anthony, head of microinsurance at Allianz SE, believes that a fifth of their customers will be on "very low income" by 2020. He was asked his view of the market in five years time and added: "Looking at the global map of Allianz and microinsurance we see extremely strong growth patterns, particularly in Asia, less so in Africa as of yet, and to a solid degree in Latin America where we have a market in Colombia."
Asked how Allianz aimed to offer such small premiums without losing money, he continued: "Distribution is king. How do we reach out to the rural population that is hours and kilometres away from the next urban agglomeration? In order to get there, we need to work with local structures, local organisations that by themselves have access to the rural population. Those can be NGOs, grass root organisations, microfinance institutions, farming cooperatives, the tea or milk dairy boards, etc..."
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Microinsurance may take time to develop in Kenya
Capital Business, 25 October 2010
The Association of Kenya Insurers (AKI) says it may take up to three years for microinsurance to take root in the country. AKI Chairman Steven Wandera said that while insurance firms had made great strides in developing insurance products for the low-income customers, they were yet to reach levels that could guarantee sustainability.
"I do not think there is any insurance firm that has broken into economies of scale with regard to the numbers of customers," Mr Wandera added.
Industry statistics indicate that only 6.8 percent of the Kenyan populace had purchased insurance products. "The main challenge with regard to the need to insure at the bottom of the pyramid is insurance awareness. You can imagine that many in Nairobi don’t even utilise it (insurance products) so by the time we get to the rural area, there is a much bigger problem," he explained.
In Kenya, which is presently only second to South Africa in the provision of microinsurance in Africa, overall insurance penetration is still wanting due to low levels of awareness.