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Insurance options for farmers grow

NAIROBI, September 8 – Kenya’s small scale tea growers can now take advantage of a micro insurance product covering health and funeral expenses for farmers through low monthly premiums.

The product dubbed ‘Kinga ya Mkulima’ is a partnership between BRITAK and Majani Insurance Brokers, a subsidiary of Kenya Tea Development Agency (KTDA) and is  tailor-made for the country’s 500,000 small scale tea growers.

BRITAK’s Managing Director, Stephen Wandera said the product would assist tea farmers find ways out of poverty through enhancement of financial planning for households and opening up social security for small scale tea farmers.

“This product offers flexibility in premium financing, achieves the simultaneous objectives of affordability and efficient collection, and ensures that renewal and lapse processes are more flexible than traditional insurance products,” Wandera said.

Farmers will be required to make individual monthly contributions of Sh85, equivalent to Sh2.50 per day and add up to Sh155 when it includes spouses.   The one-time annual premium for the farmers amounts to Sh1, 020 and Sh1, 860 with the inclusion of partners.

Premiums amounting to Sh1, 020 will qualify for Sh100, 000 while Sh2, 040 will qualify for payment of up to Sh200, 000. The policy will also pay between Sh20, 000 and Sh40, 000 for hospitalisation of a grower or spouse.

Insurance penetration in the country is still very small – at just over one percent – compared to other emerging economies such as South Africa, where it is at 14.6 percent. In India, it stands at 3.7 percent.

Wandera said the company sees growth potential in rural markets and will introduce a variety of micro-insurance products that would be delivered through a variety of institutional means, including cooperatives and community based organisations via a ‘partner-agent model’.

"We see a significant growth potential in the rural markets. People in these areas have not been provided with adequate choice of quality insurance products and need to be educated on the benefits of insuring their lives," Wandera said.

Speaking on the strategy to tap this market, he said the company would develop a rural business model that would ensure smooth operations as businesses scales up.

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He said the company planned to enhance its presence in rural areas through a combination of distribution channels.  It was also in the process of tying-up with banks to provide its products to larger audiences.

“The partner-agent model will enable BRITAK and its partner organisations maximise synergies while focusing on their core business and expertise,” said Wandera.

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