Role of insurance in emerging dairy economies.

Acre Africa

Introduction

May 2015

Milk Makes People Great

Benefits of milk to both humans and wildlife

Overview

• About Acre Africa

• Agricultural Risks

• Why Dairy Insurance

• Challenges

• Way Forward

About Acre Africa

• We are a micro-insurance product designer linking stakeholders in the agricultural sector to insurance products through localized solutions that reduce climate-associated risk.

• We operate as an insurance intermediary – an organization that is not an insurance company, but rather working with local insurers and other stakeholders in the agricultural insurance value chain.

• We are a registered insurance surveyor in Kenya, an insurance agent in Rwanda, with registration on-going in Tanzania.

• We have 24 staff members from diverse professional fields such as Insurance, Agriculture and Veterinary Sciences, Actuarial Science, Marketing and Finance

Business Model

Credit life and Funeral Cover(Premium 0.75%)

Group Mortality Cover(Premium 2.5%)

Accidental Death Cover(Premium 3.5%)

Product Categories

Risks Faced by Players in The Dairy Value Chain

• Weather risks : Risks of abrupt and extensive drought

• Disease risks : Risks of contagious disease outbreaks of resistant strains

• Credit risks : Default due to either loss of animal or income

• Political risks : Political uncertainty leading to disruption of farming activities

• Market Risks : Fluctuations in milk prices

Why Dairy insurance

• Insurance supports wealth creation

• Wealth for smallholder agriculturalists is often only a ‘hope’ and never a reality as levels

of savings are tenuous and limited

• Risk-aversion stops smallholders investing in increased agricultural technology

• Insurance helps shift some of that burden of potential loss in the system through the

value chain to other actors

Challenges

• Insurance companies don’t see the smaller farmer as a profitable client

• Lack of trust

• High transaction costs , low returns and High risks

• Insurance modelling data are limited, patchy and unreliable,

• Poor infrastructure, access to markets is fractured .

• Fraud

Way Forward

• Develop insurance packages relevant to farmers

• Take out transactional costs to lower premiums making insurance easily available

and accessible

• Combined insurance products with other value added services (veterinary

services, loss of income cover)

• Capitalizing on the established reputations of known stakeholders

• Built trust by showing it works, payouts can happen and wealth can be created

Thank You

Dr.Stephen Dindy

(Product Manager-Livestock Insurance)

(B.V.M,U.o.N)