IMPLEMENTATION OF INDEX INSURANCE: EXAMPLES FROM ACROSS THE CONTINENT JULY 19, 2018, at Ramada Encore Hotel, Dar el Salaam, Tanzania presenter Ali Muhammad Katu ACII, EMBA CHARTERED INSURER (General Manager – GAIP)

Agricultural Insurance in Ghana The Challenges encountered OUTLINE Agricultural Insurance in Ghana The Challenges encountered Partnerships The Role of Public and Private Entities The way forward

Agricultural Insurance In Ghana The Ghanaian Insurance industry operated under the Insurance Law of 2006 (Act 724) which established the National Insurance Commission (NIC) which is the Regulator The Law does not permit the operation of “Composite Insurance Companies” The Act 724 does not make provision for the agricultural insurance in the country The Regulator through the collaboration of with the GIZ and the Ghana Insurers Association (GIA) led to the formation of the Pool based on the recommendations from the feasibility studies

Agricultural Insurance in Ghana –cont’d The Pool was set up to develop innovative agricultural insurance products to meet the demands of the key stakeholders in the agricultural production sector of the value chain The started in 2011 in the three northern regions of Ghana the Pool was started with Drought Index Insurance (DII) for maize It was piloted and commercialized at the same time.

GAIP'S PERFORMANCE (2011-2017) Indicator 2011 2012 2013 2014 2015 2016 Total Area Insured (Acres) 5,045.00 769.00 4,083.47 40,294.41 36,480.50 48,466.50 18,623.80 Total Number of Farmers 3,073 490 436 2,117 3,261 4,785 3,989 Total Sum Insured (GHs) 577,654.00 75,570.00 4,088,774.00 121,827,601 6,726,065 6,439,608 18,575,213 Total Premium (GHs) 36,209.00 9,063.00 40,076.79 151,835.36 553,428.46 643,372.06 353,100.87 Claims Paid (GHs) 3,394.00 19,635.00 184.5 159,733.60 3,052,000.00 No. of Farmers 87 129 25 1,701 1,847.00

Main Challenges Absence of legal framework There is no provision for the operation of agricultural insurance in the country. The Regulator made agreement with the key stakeholders to provide that key service in the country Density of weather stations and basis risk Inadequate weather stations Absence of Satellite data from GMet Basis risks Lack of Technical Capacity There was no qualified personnel to start with (both the regulator and insurers Lack of expertise in technical areas such as underwriting and Loss assessment.

Absence of Government’s involvement The incorporation of agricultural insurance in governments agriculture production interventions is very import. The absence of this makes it difficult for scaling up Lack of premium subsidy is hindering the patronage Lack of Awareness Most farmers as well as key stakeholders such as lending institutions and processors do not know the existence of agricultural Insurance.

Perceived High Premium Rates Agricultural Insurance products are unaffordable to the target potential clients Lack of Collaboration with other institutions Bundling Agricultural Insurance products with credit facilities or inputs stimulate higher patronage. The Banks do not feel comfortable bundling agricultural insurance products with credit due to high premium rates Processors who support farmers with inputs are unwilling to pass on the cost since the perceived that the farmer could not pay.

Partnerships German Development Corporation (GIZ) Provision of funding for the establishment of the Agricultural insurance programme Hiring of consultants for both the feasibility studies and implementation Hiring of consultants for the development of Drought index Insurance product Capacity building USAID/ADVANCE Provision of Logistics, hiring of staff for the Pool, training and sensitization of both staff and farmers

USAID/FinGAP Provision of logistics and support in the training and sensitization of financial institutions Innovation for Poverty Alleviation (IPA) Support in the marketing of Insurance products to their farmers Research work of impact of Agric. Insurance Alliance for Green Revolution for Africa (AGRA) Capacity building and technical assistance

The Role of Public Ministry of Food and Agriculture (MoFA) All government interventions and policies Ministry of Finance and the Regulator Provision of conducive atmosphere To support premium subsidy Public Institutions: Ghana Meteorological Agency (GMeT) Provision of Rainfall Data for DII Statistics, Research and Information Dept (MoFA) Provision of Yield data Ghana Space Science and Technology Institute Provision of rainfall and yield data (at a fee) Farmer Groups and individuals Should patronize agricultural insurance products as a modern risk mitigation tool

The Role of Private Entities Ghana Insurers Association (GIA) Financial Support for the running of the Pool Direct Underwriting Companies Underwriting the index insurance as another line of business, Coming together to provide the service (as a pool or consortium) Financial Institutions Collaboration with Insurance Companies for the bundling of agricultural insurance products with credit facilities Processors Incorporation of agricultural insurance products to their support to farmers to protect their investments Input Dealers Bundling Insurance products with their inputs to farmers

The Way Forward The Regulator should create the right atmosphere for stainable agricultural insurance programme Collaboration among the Regulator, Donor Partners and Insurance Companies is very important Capacity building for Regulators, Service Providers and other stakeholders The Ministry of Agriculture, Livestock and Fisheries (MALF) and the Ministry of Finance and Planning (MoFP) must be actively involved

Formulation of National Policy for Agricultural Insurance in Tanzania Provision of funding for the establishment of the Agricultural Insurance Scheme (if not private sector led) and the model to be adopted (PPP, etc) Premiums subsidy to make Agricultural Insurance products affordable to smallholder farmers Facilitation of the collaboration between state institutions and Agricultural Insurance Scheme for affordable data (Expansion of weather stations, etc.)

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