Extreme weather: African farmers now better protected by insurance, says study

Feb 03, 2015

New forms of insurance offer better protection for African small farmers against catastrophes.

New types of insurance launched by African governments are doing a better job at protecting small farmers, according to a new study.

It made farmers more resilient to extreme weather events made worse by global warming, and obstacles like poor infrastructure and lack of financing, says the document, released last week by Columbia University and the research group Climate Change, Agriculture and Food Security (CCAFS), Reuters reports.

More farmers are able to obtain coverage than before due to a switch to index insurance from traditional indemnity insurance, where the size of payouts is based on specific losses faced by a client.

Until now, it was not viable for traditional insurers to assess and cover many small farms with low margins, as it was not worthwhile to investigate claims, the study said.

The new index model allows farmers to buy insurance so they receive a payout if the amount of rainfall in a given period increases or decreases beyond acceptable levels, or if average crop yields in a certain region drop below an acceptable level.

In Nigeria, more than six million farmers will be benefiting from one crop insurance plan by the end of this year, said senior agricultural ministry official Débísí Àràbà.

Meanwhile, the African Risk Capacity (ARC) recently said it would pay out $25 million (€22.2 million) to Mauritania, Niger and Senegal as part of an insurance scheme against natural disasters.

The catastrophe insurance model is tailored to African climate issues, developed by the ARC, a specialised agency of the African Union. Kenya, Niger, Mauritania and Senegal are the first African nations to adopt this new funding method.