Kenyan agricultural insurance picking up pace

In 2006, Swiss Re instituted an agricultural insurance market potential study in Kenya. The outcome of this study two years later marked the entry point for Swiss Re into the East African Market.

In collaboration with local insurance partners, Swiss Re developed a traditional indemnity-based, multi-peril crop insurance product targeting the medium-scale to large-scale commercial farming segment in 2008. Banks, micro-financiers, cooperatives and commodity associations acted as aggregators.

By 2011, over 1,000 farmers in 15 districts of Kenya were insured, bringing in a total premium income of about USD 2 million. Over 50,000 hectares of barley, wheat, tobacco, sugarcane and maize were covered, representing about 0.6% of all arable land in Kenya. When excessive rainfall and drought hit the country in 2008 and 2010, farmers were compensated for their losses from the insurance product without receiving any subsidies.

In it for the long haul, Swiss Re continues to develop tailor-made insurance and reinsurance solutions for the East African agricultural sector by deploying capital, offering innovative solutions, imparting underwriting and marketing skills to the market, as well as hosting various workshops aimed at increasing business in this market.

Lovemore Forichi, Senior Underwriter for Agricultural Business in Africa says: “Successful product offering hinges on the provision of home grown solutions that are demand driven. Through cooperation with local partners, Swiss Re was able to unlock the Kenyan agricultural insurance potential and will continue to build on this initial success to help develop local underwriting and loss adjustment skills that are pivotal to the long term sustainability of the product and are still needed in this new market. Exploration of risk management solutions for the lower tier of the value chain is also in progress.”

Reto J Schneider, Head of Agriculture business in Africa, Europe and America says: “Swiss Re has been highly committed to this market for years now and sees great opportunities to contribute to the further development of the agricultural sector in Africa, using appropriate risk transfer solutions in cooperation with our local partners.”

A third agricultural workshop was held in Nairobi, Kenya in June 2012 where stakeholders from the agricultural value chain shared experiences and explored opportunities aimed at enhancing prudent agricultural risk management solutions and practices, with the ultimate goal of contributing to global food security.

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