Introduction to Agricultural Insurance
Agricultural insurance can be defined as the risk management mechanisms put in place to compensate farmers for losses due to natural calamities such as floods, droughts, and outbreaks of pests and diseases or due to declines in the prices of agricultural commodities.
Agricultural insurance refers to the risk strategies initiated to help farmers overcome some natural calamities and challenges associated with farming.
Farming like any other form of business is characterized by one form of risk or the other, due to this fact, many farms have become bankrupt or in serious financial problems with financial houses or friends because of their inability to meet up with the financial obligation.
These challenges occur as a result of unforeseen circumstances that lead to the destruction of the farmers’ farm animals by fire, and outbreaks during the dry season which reduce the farmers’ income.
Pest and disease, on the other hand, can infest and wipe out a whole farm containing verities of crops and a whole herd of animals making it very difficult for farmers to meet up with the financial obligation arising from the incident of pest and disease.
To prevent the risk associated with natural disasters, mechanisms can be put in place to help farmers overcome some of these challenges, and ensure profitability.
This mechanism put in place to help farmers overcome these natural incidences that have negatively affected crops and animals is called Agricultural insurance.
Agricultural Insurance refers to the risk management policy designed to provide help to farmers in the event of eventuality and to ensure their continuity in the farming business.
Read Also: Top 6 Contributions of Farm Credits and Insurance in Agricultural Development That You Are Aware of.
Importance Agricultural Insurance
The importance of agricultural insurance includes the following:
Guarantees Farmers’ Income Against Losses
Insurance guarantees farmers’ income against losses due to natural disasters. risk protection policy provides effective coverage for any losses incurred by the farmers in case of natural disasters such as fire, pest and disease, flood, and drought.
If farmers are unable to fulfill their obligation or default on the loan because of natural incidents the Agricultural insurance policy protects agripreneur against financial loss as a result of damages to crops and animals.
Farming activities interrupted due to unforeseen circumstance attracts insurance coverage, if the farmer suffers damages to properties or other insured dangers.
Guards against Failure of Farm Business
Insurance saves and guards against the failure/collapse of farm businesses or enterprises.
The sudden occurrences of natural incidences such as fire, flood, and the outbreak of pests and diseases can lead to the total collapse of the farm enterprise.
Farm enterprises or agro-industries require one form of agricultural insurance or another to stay in business.
Uncertainty in farming business or agro-allied industries are numerous, farmers need to adopt insurance policy to cover the enterprise to enable farmers or entrepreneurs to stay in the farming business.
Challenges such as inadequate resources, market forces, Seasonal variation in yields, and natural disasters affect the infant agribusiness or Agro-allied industries. New farmers or entrepreneurs are more often exposed to financial shocks than their competitors.
It is expedient that as the farmer is focusing on opportunities for the growth of the farm and pursuing profit, the farmers should also seek to manage risk in the farm enterprise,
Agripreneurs can make effective use of insurance policies to help them transfer risk and uncertainty that can cause meaningful financial difficulty for the farming business or enterprise to insurance companies. Agro-insurance therefore provides a cost-effective means to protect farm businesses or agro-industries from collapsing.
Encourages Agricultural Development
Agricultural insurance policy creates the conditions for the fulfillment of agribusiness initiatives.
These conditions include overcoming financial Bottlenecks, encouraging trust, and protecting farmers’ properties.
The uses of farm technology to boost agricultural production will be held in high esteem because insurance policies could be hooked to pay for repairs, legal fees, and replacement costs.
The use of farm machines comes with a lot of huge financial involvement and demands enormous financial coverage which could jeopardize the sources of agribusiness or depict such business in a bad position.
risk protection policies will help reduce institutions’ transaction costs, encourage trust, and protect farmers’ properties.
insurance policy encourages agricultural development by investing in multi-sectional aspects of agricultural production and promoting positive change in the farming business.
More so, agricultural insurance is aimed at supporting farmers and young agripreneurs by providing sustainable inclusive agricultural development.
Encourage Farmers to Plan for the Future
Insurance policy coverage enables agripreneurs to plan for the future. One of the biggest attributes of the risk protection organisaion is the assurance it gives to agripreneurs in the face of farm business uncertainties.
With the help of risk protection policy covers, farm owners or agripreneurs can predict the future of the farm business, and plan with full assurance that the business will stay afloat even in the face of uncertainties.
Attracts Investors to Agricultural Business
Agricultural expansion and production are positively influenced by insurance.
Agricultural Insurance policy strategies give agripreneurs the assurance to take on challenging initiatives and innovate by investing in a safe agricultural profitable venture.
insurance policy coverage on a particular farm business or agro-allied industries could be valuable insights for investors in agriculture.
Agro Companies with adequate insurance coverage provide informed investment analysis and decision-making in agricultural production that can provide Apple opportunities for investors in agriculture.
insurance offers an attractive investment opportunity for agripreneurs because of the assurance of predictable and stable cash flows in terms of uncertainties, attracting private investment in agriculture relies on a wide set of insurance policies.
Agripreneur can support farming initiatives that are unyielding, sustainable, and have better risk management strategies.
Investors in agricultural production are usually attracted by better facilities and shared costs, do better financially, and are predisposed to better market opportunities —all of which can support more resilient, sustainable, and less risky operations.
Encourages Farming
Guaranteed financial credit or loan repayment, providing financial security and stability in the event of uncertainties will encourage farming.
risk protection agencies encourage farming by providing financial security and stability for farming
enterprises adequate risk management of crops and animal production and marketing of agricultural products across the globe.
Since insurance plans also protect lenders and promote a conducive environment for lenders to give financial backup to farmers, they will encourage them to invest more than their existing hectare of farm
More so, the agro-insurance company promotes corporate participation in foreign trade, which promotes exports, and imports of agricultural products thereby encouraging farming
Improve Farmers’ Standard of Living
Insurance can help agribusiness or agro-allied industries overcome financial difficulty, and providing financial security and stability in the event of uncertainties will help improve farmers’ living standards.
Insurance encourages large farming, reduces poverty, and farm security, prevents bankruptcy, and increases farmer profit.
Insurance can safely guide the farmers’ farm by providing food security, and export earnings which could be used for feeding and payment of salaries on the farm.
The risk arising from uncertainty or unfavorable situations arising from farm or business failure can lead to serious health challenges or the death of the farmers which the insurance company will help to manage by paying a premium to the insurer, this will help improve the farmer’s standard of living.
Since insurance companies are involved in generating revenue from Charging premiums in exchange for insurance coverage and reinvesting, farms can take advantage of the opportunity of insurance packages to reinvest their profit into the insurance company in other to expand their farm.
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Facilitates Access to Farm Credits
Farm Credits are very essential for the expansion of agriculture production and promote farmers’ participation in agricultural activities.
Agro businesses or enterprises with good agro-insurance licenses or certificates can serve as Collateral security or facilitate farm credits from commercial banks or financial houses like insurance companies.
Collateral security or facilitate serves as an intermediary between financial houses and loan seekers or borrowers.
Financial houses or commercial banks demand credit-worthy instruments before loan facilitate or credit can be released to the agripreneur and insurance coverage can serve as an efficient tool for financial companies to channel credit toward agricultural production.
Farm owners with good insurance policy coverage can have access to credit facilities at lower rates from insurance companies instead of sourcing from the market with high interest rates.
Frequently Ask Questions
List Agricultural insurance companies in Nigeria.
Some list of the agro insurance companies listed by Lusha. com is
- A&G Insurance PLC
- AIICO INSURANCE PLC
- ARM Life PLC
- AXA Mansard Insurance PLC
- African Alliance Insurance PLC
- African Reinsurance Corporation
- Afriglobal Insurance Brokers Limited
- Allianz Nigeria Insurance Ltd
- American International Insurance Co
- Anchor Insurance Company Limited
- Ark Insurance Group
- Atiat Insurance Brokers
- CIIN Chartered Insurance Institute of Nigeria
- Capital Express Assurance Limited
- Chartered Insurance Institute of Nigeria
- Colenson Brokers Nigeria Limited
- Consolidated Hallmark Insurance PLC
- Continental Reinsurance PLC
- Cornerstone Insurance Plc
- Coronation Insurance PLC.
- Crown Insurance Brokers PLC
- Custodian Investment PLC
- DIG Insurance Brokers Limited
- Davisther Brokers Limited
- Davisther Insurance Brokers Limited
- Eco Insurance Brokers Limited
- Ensure Insurance
- Enterprise Life Nigeria
- Equity Assurance PLC
- FBN Brokers
- Glanvill Enthoven Group
- Great Nigeria Insurance Plc
- Guinea Insurance Plc
- Heirs Insurance
- Heirs Insurance Brokers
- Heirs Life
- Hogg Robinson Nigeria Limited
- Industrial and General Insurance (IGI) PLC
- Insurance Brokers of Nigeria Limited
- Institute of Energy Insurance (IAI)
- Jaiz Takaful Insurance PLC
- Jordans Global Insurance Brokers Ltd
- Lasaco Assurance PLC
- Linkage Assurance PLC
- Leadway Assurance PLC
- Livingstone Insurance Brokers Limited
- Marina Medical Services HMO Ltd
- Mediplan Healthcare Limited
- Mutual Benefits Assurance Plc.
- Nigeria liability insurance pool
- Nigeria Reinsurance Corporation
- Nirsal.com
- Nigerian Agricultural Insurance Corporation
- Orange Insurance Brokers Limited
- Oratib Insurance Consulting Limited
- Prestige Assurance PLC
- Prudential Zenith Life Insurance
- Regency Alliance Insurance PLC
- Regenix Healthcare Services Ltd
- Risk Analyst Insurance Brokers Limited
- Royal Exchange General Insurance Company
- SBG Insurance Brokers Ltd
- Sterling Assurance Nigeria Limited
- Salam Takaful Insurance
- Scott Person and Associates
- Securisk Insurance Brokers Africa LTD
- Senforce Insurance Brokers
- Smooth-way Insurance Brokers
- Sovereign Trust Insurance PLC
- Staco Insurance PLC
- Stanbic IBTC Insurance Brokers
- Standard Alliance Insurance PLC
- Standard Insurance Consultants Limited
- Thames Insurance Brokers & Risk Managers Limited
- Thrive Insurance Brokers Limited
- Unitrust Insurance Co. Ltd.
- Unity Capital Assurance PLC
- Universal Insurance PLC.
- Venus Medicare
- Veritas Capital Assurance plc
- Wapic Insurance Plc.
- We-care Insurance Brokers Ltd
- YOA Insurance Brokers
- Yadah-G Global Insurance Brokers
- Zenith Insurance NG
- insurance Hub
Agricultural insurance ss3
The ss3 agricultural insurance scheme of work consists of the definition of insurance, benefits of insurance, and types of insurance.
under the SS3, Agricultural insurance can be defined as the risk management mechanisms put in place to compensate farmers for losses due to natural calamities such as floods, droughts, and outbreaks of pests and diseases or due to declines in the prices of agricultural commodities.
It also refers to the risk management policy designed to provide help to farmers in the event of eventuality and to ensure their continuity in the farming business.
The benefits of agricultural insurance include guaranteeing income against Losses, guiding against losses, aiding large farming, encouraging investors, and improving farmers’ standard of living.
The types of agricultural insurance in the SS3 scheme of work include; fire insurance, livestock insurance, crop insurance, and farm equipment insurance.
In conclusion
The importance of agricultural insurance in the expansion of agricultural enterprises cannot be overemphasized.
Some of the benefits of insurance in agro-enterprises among those discussed are guaranteeing farmers’ income against Losses, guiding against losses, aiding large farming, encouraging investors, and improving farmers’ standard of living.
Farmers should visit any of the insurance companies listed above to register their farms against losses and business failures.