Farm insurance

Sometime ago, an insurance broker advised a retiree, who just got into farming to insure his fish pond and poultry. The retiree saw sense in the broker’s proposal. The broker had asked him a simple question: “Sir, if you lose everything in this farm, do you have the resources to replace them?” The retiree answered that he didn’t. But even if he had answered yes, doesn’t he have other worthwhile things to do with the money. Anyway, the broker then told him, “This is why it is important to secure the farm via insurance.” The broker’s argument made sense. Then the farmer told him to get him a quote. The broker shopped around the two or three insurance companies underwriting farm insurance at the time and got a comparatively low rate for the retiree.

But when he saw the rate, he baulked; he was expecting it to be low like the rates for fire and special perils insurance. The broker explained to him that like motor insurance, the risk is higher, so the rate should also be commensurate. To cut short a long story, the retiree ultimately did not do the insurance. Unfortunately that was the year that recorded massive flooding across Nigeria. The flood overran his farm. His fish ponds were over-flooded and most of his fish swam away while the poultry collapsed, resulting in the death of virtually all his birds.

This year, there has been massive flooding again across the nation. Farmers are counting their losses in billions already. Those without insurance have to find a way to pick themselves up. But this thunder should not be allowed to strike the same spot again

The government has promised to do something to tackle the persistent flooding subsequently. But do not bank on it. No matter the good intentions of government, scarce resources and other factors will continue to be impediments. Rather than wait for government measures, which are outside their control, farmers can actually help themselves by taking up farm insurance. Where the farmers are in a group, they can take the policy as a group. This will even reduce the sum insured for individual farmers. Farm insurance policy comes in variants to take care of specific risks.

A Poultry Insurance Policy will cover the liability of poultry farmers against the perils peculiar to poultry business. These include death of the birds which may be caused directly by fire, flood, windstorm, lightning, accident and disease.  Provided your sum insured is adequate, the policy will get you full indemnity in the event of the occurrence of any of the insured perils. The implication is that had the retiree taken this policy to cover his poultry, he would have been compensated when flooding killed his birds.

Another variant of farm insurance is Fish Farm Insurance Policy. This policy, which is targeted at owners of fish farms, insures the fish stock against death and also insures the fish pond against collapse as a result of an accident. In the event of death of the fish stock or collapse of the fish pond, the policy provides for the policy holder to be compensated based on the sum insured and terms of the policy.

The third variant of farm insurance is the Farm Property and Produce Insurance Policy. This policy covers the policy holder’s farm against loss or damage to his farm property, for instance, warehouse and farm equipment) and agricultural produce that is caused directly by fire, lightning, flood, explosion and other insured perils. The policy holder is compensated when his farm property or agricultural produce is damaged or destroyed by insured perils. These policies above are the offerings of one of the few insurance companies underwriting farm insurance in Nigeria.

The number of insurance companies offering farm insurance has doubled with the licensing of additional companies to underwrite farm insurance. One of these companies offers Farm All Risk lnsurance, which is designed to cover the farm buildings/contents, farm products and machinery against theft and fire. It also provides cover on general accident for the staff working in the farm and farmers’ legal liability.

Agriculture is a high risk sector exposed to man-induced disasters and perils of nature. It is also a very critical sector of the economy. Stakeholders in the sector need to buy into insurance as a habit. Happily for them, more insurance companies are now underwriting farm insurance, which will make it more accessible and the rates more competitive. Farm insurance can also be tailored to suit the circumstances of individual farmers.

Farmers in Nigeria have many factors that are outside their control and should embrace insurance without much prodding. But ignorance, illiteracy and lack of organisation have robbed them of the opportunity of giving themselves peace of mind via insurance. With its avowed determination to ensure that we are self-sufficient in food production, government should find a way of incorporating farm insurance into the various programmes for farmers.

Farmers and stakeholders in the sector can contact Registered Insurance Brokers on Farm insurance and underwriters offering the product.