The National Insurance Commission (NAICOM) has granted product approval to five insurance companies participating in the Index-Based Agricultural Insurance (IBAI) pilot scheme. The Director, Inspectorate, NAICOM Barineka Thompson, who disclosed this in a seminar paper, noted that the approvals were in line with the ongoing efforts by the current administration to diversify the economy and create opportunities to promote agro business and employment. According to him, IBAI is a relatively new financial instrument for transferring agriculture risks from individuals or groups of farmers to (international) risk carriers (Insurers), adding that in an Index-Based System, when a claim is triggered for a specific area, all insured units (farmers) within a given geographical area and having similar characteristics, are compensated at the same payout rate, usually a percentage of the sum insured, on events specifically covered by the policy (usually those for which the proxies meet the specified triggers). He said IBAI paid out benefits on the basis of a predetermined index (e.g. rainfall level, crop yield) for loss of assets and investments, primarily working capital, resulting from weather and catastrophic events, without requiring the traditional insurance services and that the purpose is to compensate farmers in the event of a loss resulting from shared risks (rather than individual risk) associated with weather fluctuations, disease outbreaks or poor yield. Thompson said NAICOM was collaborating with the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) on the initiative, stressing that NIRSAL was looking to expand insurance products for agricultural lending from the current coverage of 0.5 million to 3.8 million agricultural primary producers. He said the pilot scheme was running in 10 states – Adamawa; Bauchi; Benue; Kaduna; Kano; Kasina; Kebbi; Nasarawa; Taraba and Zafara, while the crops are rice; maize; soya and sorghum. “The 2017 planting (wet) season has gone with five insurance companies participating in the consortium mainly under the NIRSAL facility, we anticipate that more companies will join in the 2018 planting season as a result of greater awareness and the upcoming capacity building programme,” he said. Source - https://newtelegraphonline.com