Report: Agric Insurance Contributes 1.6% of Non Life Insurance Premium in Africa
Premium from Agricultural Insurance contributes 1.6 per cent of total non life insurance premium generated in Africa, the latest edition of the Africa Insurance Pulse on food security and agricultural insurance has revealed.
According to the report, out of this, South Africa generates the highest premium of over $100 million followed by Morocco and Botswana which generated between $20 and$40 million while Nigeria ranks fourth with over N10 million premium.
But regional insurers said there is a large untapped potential in agric insurance which according to them is critical to food security in the region.
Launched at the recent 49th Conference and General Assembly of the African Insurance Organisation (AIO) in Algiers, Algeria, the Africa Insurance Pulse on food security and agricultural insurance, said agric Insurance acts as a safety net for farmers and food producers by transferring the financial risk of production or distribution to the insurance sector.
AIO Secretary General, Jean Baptiste Ntukamazina said: “Agricultural insurance is critical to promoting food security in Africa. It acts as a safety net for farmers and food producers by transferring the financial risk of production or distribution to the insurance sector. This stabilises food production and increases resilience to disasters. In addition, insurance provides incentives for sustainable practices such as conservation agriculture and crop diversification, thereby improving food security. Insurance also helps facilitate investment in new technologies and infrastructure, ultimately increasing agricultural productivity.”
According to the report, the global market for agricultural insurance is growing, including in Africa adding, “The global agricultural insurance market has grown significantly due to the increasing need for risk management tools in agriculture.”
Swiss Re, in a recent report said the global agricultural insurance market was valued at $46 billion in 2020 and is expected to reach $80 billion by 2030, growing at a compound annual growth rate (CAGR) of 5.7 percent.
According to the report, the largest markets for agricultural insurance premiums today are the United States and China, with annual premium volumes of $15 billion and $12 billion respectively, which together account for more than 50 per cent of the global market.
The report noted that despite the economic importance of the agricultural sector to many African countries, the agricultural insurance market in Africa was underdeveloped, with low penetration and a limited range of products.
It said however, that the market had been growing in recent years, driven by increased demand from farmers for risk management solutions and the development of new technologies and insurance models.
“In 2020, African agricultural insurance premiums were estimated at USD 320 million, representing 1.6 percent of total African non-life insurance premiums of USD 19,730 million. Despite being slightly higher than the global share of 1.3 percent there is a large untapped potential, ”the report stated.