NAIROBI, Kenya, Dec 13 – Farmers who have insured their crops against damage with CIC Insurance Group are set to receive Sh40 million from insurance claims.
CIC Insurance Group General Manager, Kenneth Kimani said this will help farmers recover from drought losses experienced in various parts of the country.
A large portion of the amount, Sh32 million, has been paid out to Co-operative Bank under the tripartite agreement that includes the bank, CIC Insurance Group and East Africa Maltings Ltd.
“Our pool of funds is adequate to shield farmers in the event of adverse weather,” said Kimani.
The insurer is banking on the claims payout to prove to farmers that crop insurance works and to encourage more farmers to take up crop insurance as a way of mitigating weather losses.
“More barley, wheat, maize and sorghum farmers are protecting their crop with our policy as they’ve realised we can process claims promptly and we have the finances to pay,” said Kimani.
The tripartite scheme presently has over 500 farmers, each growing a minimum of 14 hectares of barley. The farmers are spread across the country, but mainly in Nakuru, Eldoret, Laikipia and Timau areas. Other areas include Kinangop and Maralal.
“This year, we have covered a total of over 25,000 hectares of crop across the country,” he explained.
The policy covers yield losses as a result of adverse weather perils, i.e. drought, excess rains, hail, frost and fire.
In September, CIC Insurance Group paid out a Sh10 million wheat claim after Wangu Investment Ltd in Timau recorded yields lower than the insured amount.
“The farm lost 4,000 bags and the payout represented the loss in cost of production per acre, as a result of drought,” confirmed Michael Waigwa, CIC Insurance Agricultural Underwriter.
“The farmer is compensated if eventually he gets less than a set yield trigger, normally between 50percent to 70percent of normal average yield. This enables the farmer to go back to production the following season,” Waigwa said.
“Crop insurance is a must have for farmers. Farming is a risky business and you can never count your harvest until it’s in the store. If you escape a drought, an excessive rain can ruin your crop at harvest, putting you into misery ” Waigwa advised.
“By managing the risk of weather through insurance, we expect that more farmers will go into production. Banks will unlock more credit to agriculture and the country will benefit with improved food production and security,” Kimani added.
CIC Insurance Group has bought adequate reinsurance to underwrite individual risks of varying sizes. “For instance, for a crop of wheat, we can insure the largest farmers in the country. Some of the large scale farmers in our books have insured over 3,000 acres of crop,” confirmed the GM.
The multi-peril insurance cover involves physical crop inspections and farm visits by insurer agronomists and the crop is insured after satisfactory germination. Farmers are required to plant within a stipulated planting window, as this gives the earliest and the latest planting dates for a given region. This ensures that the planted crop receives enough moisture to achieve good yields.