Connect with us

Hi, what are you looking for?
the second phase of funding has received a catalytic investment of Sh900 million.


New data science can unlock US$20mn agriculture insurance business in East Africa

NAIROBI, Kenya, Mar 27 – Allianz Africa is eyeing the agriculture insurance sector in Kenya and the East African region which they say is set to grow by 200 percent.

Allianz experts estimate that the value of the agriculture insurance segment to stand at $10 million but say it holds the potential to grow to $30 million. They aim at partnering with aggregators such as banks, cooperatives, agro-dealers, and commodity Associations to deploy the solution, said Lovemore Forichi, Senior Underwriter of Agriculture at Allianz Re

“According to our estimates, Agriculture Insurance Premium globally is USD 32 billion. East Africa contributes about USD18 million of which Kenya is about USD10 million. Governments and the Private Sector in East Africa are working together to increase agriculture insurance penetration in the region. Less than 5% of the Kenya farming community is insured,” said Lovemore

Allianz, one of the world’s leading insurers and asset managers, entered the East African market last year after signing an agreement with Jubilee Insurance to establish a strategic partnership in the five African countries where Jubilee Insurance currently operates.

The partnership covers the general insurance business (also known as the property & casualty insurance segment) in Kenya, Tanzania and Uganda as well as the short-term insurance segment in Burundi and Mauritius. JHL retains its ownership of its Life and Pensions operations and its Medical insurance business in Kenya, Uganda and Tanzania.

Lovermore says that Allianz aims at unlocking the potential using parametrics which is a non-traditional insurance product that offers pre-specified payouts based upon trigger events such as wind speed and rainfall measurements.

“Operationally, parametric solutions are less cumbersome as the insurance company does not need to visit the farm and occupy the farmer`s time. Monitoring of the index can be done remotely through satellite imagery and data. The farmer can also have access to the data and they can closely monitor the development of the index throughout the growing season on their mobile phone or tablet. This also makes it very transparent, traceable, efficient, and paperless,” said the official.

Through parametrics, farmers can choose which parameter is of concern to them, as far as affecting their crop yield is concerned. The most common parameter is rainfall. Lack of rainfall during the cropping season (drought) as well as too much rainfall (excessive rainfall) have a huge impact on the farmers’ yield and subsequently the revenue.

So the farmer will choose to insure against drought and/or excessive rainfall to hedge their losses. When the insurance company uses index insurance solutions such as Rainfall Index, Evapotranspiration Index, Soil Moisture Index, and Area Yield Index, these are classified as parametric solutions.

Advertisement. Scroll to continue reading.

Over the years,  more insurance companies are venturing into the agricultural space as farmers are increasingly understanding the value of insurance as they learn from other people’s experiences.

The Kenyan government and private sector are also actively contributing to the insurance penetration through premium subsidies for both crop and livestock farmers as only less than 5% of the Kenya farming community are insured.

1 Comment

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...


NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...


NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...


NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...


NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...