1. 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)

2. 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

3. 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

4. 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.

5. 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

6. 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.

7. 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.

8. 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.

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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.)

15. THANK YOU FOR YOUR ATTENTION!