John Kachembere 9 May 2018
HARARE – Newly-resettled farmers continue to shun insurance products
despite efforts by government and the corporate sector to provide cheaper
programmes targeting the agriculture sector, industry experts have said.
Zimbabwe’s insurance penetration rate, which reached a high of 10 percent
in the early 1990s, has been declining significantly over the last two
decades with official figures showing that it dropped to a low of 1,5
percent in 2015.
Market experts attribute the decline in insurance ratio to the country’s
chaotic land reform exercise that forced over 4 000 commercial farmers off
the land to pave way for over 250 000 landless blacks.
Although the policy was meant to redress colonial land imbalances it
resulted in significant decline in agricultural production, massive
company closures and high unemployment rate.
Old Mutual Insurance’s senior business development manager Immaculate
Musonza said insurance uptake among farmers took a dip when a large number
of white farmers stopped agricultural production.
“The commercial farmers of yesteryear used to take agriculture as a
business. They would take insurance for their crops always. But now you
still find that there are many farmers who don’t take agriculture as a
business and don’t insure their crops and livestock,” she said during an
insurance workshop recently.
Musonza noted that most current farmers only insure their crops when they
suspect that they will incur losses.
“If they think they will not incur losses, they don’t take insurance for
their products. Agriculture should be taken as a business and farmers
should always take insurance for their products in case something bad
happens,” she added.
This comes as agriculture has become a risky enterprise due to its
cyclical nature, risk of loss from drought, floods, pests and diseases,
fires and natural disasters.
Research shows frequency and severity of crop failure and livestock
mortality have increased over the years.
Because of the highly variable climate where any season can bring harsh
conditions, farmers have been reluctant to invest in more profitable
technologies and practices. This lack of investment, has led to
unpredictable yields, a major factor keeping farmers trapped in poverty.
Mitigation of these risks is a priority to reducing income loss, increase
agricultural productivity and enhance farmers’ well-being.
Agriculture minister Perrance Shiri recently warned farmers to take
appropriate insurance cover to mitigate risks associated with harsh
“All farmers in Zimbabwe are responsible for the insurance of their
properties against natural disasters. The prerogative lies with the
individual farmer. So, some farmers are insured and others are not
insured,” he said.
Insurance analyst Evelyn Ndlovu indicated that although the majority of
the farmers are aware of crop insurance and its benefits, only a few
understand how it works, and this limits their ability to make decisions
with regard to its uptake.
“It therefore suggests that awareness on insurance necessary but not
sufficient to promote crop insurance uptake. It would be prudent for
insurance firms to embark on a rigorous training programme in order to
provide enough information to enable farmers understand insurance clearly
and thereby demystify the concept,” she said.
“This is critical since insurance provides farmers with the opportunity to
use a critical mitigation measure against the ever increasing risk due to
climate variability. Involving farmers in the design of the products is
also crucial in improving uptake of crop insurance as this will ensure
that insurance products target crops that farmers consider valuable enough
to warrant an insurance cover,” Ndlovu added.
Recent innovations in the insurance market have led to development of
pro-poor weather index insurance to promote affordable insurance service
delivery among farmers.
Index-based insurance overcomes the obstacles to insuring smallholder
farmers against weather-related risks. With index insurance, pay-outs are
based on an objectively measured index that is correlated with farmers’
losses rather than actual losses.
Indexes used to represent agricultural risks include rainfall,
area-average yield statistics, and vegetation conditions measured by
satellites. When an index exceeds a certain threshold, farmers receive a
fast, efficient payout, in some cases delivered via mobile phone. – The