A Kenyan company promoting uptake of new crop and livestock insurance products is reaping handsome commissions with increased demand for its innovations.
Agriculture and Climate Risk Enterprise (Acre) Africa uses a combination of mobile and satellite systems to track performance of crops and livestock. The firm then uses the information gathered to offer farmers insurance services.
In the case of crops, the company uses satellite systems to identify the farmer’s exact location and monitor rainfall. If the areas does not receive sufficient rain for the seeds to germinate, the farmer gets a full refund on the money spent buying the seeds.
In the case of livestock, a veterinary officer profiles the animals to facilitate issuance of an insurance cover and a care card. The officer remains in constant touch with farmers and advise them regularly on their livestock health.
“Our approach ensures that farmers engage in commercial farming without fear of losing their investment in maize or dairy farming,” Rahab Kariuki, Acre Africa managing director, told Enterprise in an interview.
Last year, crop premiums from participating farmers hit Sh150 million, payable to four insurance firms.
Acre Africa was started in 2009 with funding from the Syngenta Foundation.
The organisation’s aim is to provide farmers with insurance so that they can comfortably invest in agribusiness.
To start with, the organisation recruited 185 farmers in Nanyuki.
The approach then was through agro-vet shops that used to act as marketing partners for the insurance products.
Ms Kariuki says this approach was abandoned due to its cumbersome process, opting instead to engage co-operative society officials to sell the idea to members.
This year they have enrolled six societies in Uasin Gishu, Bungoma and Meru. Ms Kariuki says they have since expanded to Tanzania and Rwanda bringing their total clientele to 350,000 from the initial 185 in 2009.
Initially, insurers were apprehensive about offering products to farmers given that crops could easily fail due to erratic rains, occasioning high payouts.
Ms Kariuki says that using technology, they were able to convince insurance companies to lower premium charges from six per cent to 3.5 per cent on the assumption that risk of crop failure was minimal.
To reduce processing costs, Acre Africa recommended use of mobile phone platforms for compensation payments to farmers and farmer top-ups for maize crop full term cover.
“We have installed 78 automated weather reading digital gadgets and also have access to satellite images for the select region. We also make impromptu visits in the identified areas to inspect crop and animal health,” she added.