NIGERIA: Re-engineered NAIC’s N500m Payment to Flood Victims

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While other insurers are waiting in vain for victims of last year’s flood to present their claims, the Nigerian Agricultural Insurance Corporation (NAIC) has paid over N500 million to some of the victims and has continued to build a competitive edge following the opening of agric business to all insurers.

While many Nigerians living and doing businesses in towns and villages ravaged by flood across the country continue to count their losses, insurance operators said they have waited in vain for the claims to start rolling in at their offices nationwide.

The operators said even when they are ready to surpass the expectations of their clients who may be affected none has come forward with their claims, adding that the flood disaster has exposed the lack of awareness and apathy for insurance among Nigerians.

The Managing Director of Consolidated Hallmark Insurance Plc, Mr. Eddie Efekoha, said, “As far as this flood is concerned, a lot of the places that were affected are not major buyers of insurance yet because each time l go out l ask, do you have any flooding claims so far reported. Many said they do not have any claims yet, because most of the affected areas (villages) are yet to see much development.”

Also, the Managing Director of Lasaco Assurance Plc, Mr. Olusola Ladipo-Ajayi, said, “I am not expecting a deluge of claims on insurance companies because the contract to bring about such claims does not exist.”

However, for the specialist agricultural risks underwriter, Nigerian Agricultural Insurance Corporation (NAIC), the situation is different. It recently opened up on the impact of last year’s flood on its business, saying it has already settled claims in excess of N500 million and is still verifying more in this regard.

Flood Claims
Last year, the North central part of the country faced the fury of water and flood as farmlands and properties around Benue, Kogi and other neighbouring states were submerged in flood when the River Benue started overflowing its banks following the opening of the Lagdo dam by the Cameroonian government.

For other parts of the country, excessive rainfall, which was attributed to environmental changes, caused flood across the cities.  Parts of the country including Rivers, Bayelsa, Imo, Anambra, Oyo and many other states were also submerged by water; destroying properties, crops and animals worth billions of Naira.

Speaking on the impact of last year’s flood on NAIC’s operation, the Managing Director, Dr. Tijani Garba, said, “NAIC has so far paid over N500 million verified claims to insured farmers who were victims of the 2012 flood devastation”.

According to him, investors in the agro allied industry that had their businesses insured with the corporation but were yet to be compensated for losses suffered as a result of the flood should also expect to be paid after necessary verification of their claims.
Addressing farmers and Agricultural Development Programme (ADP) Extension Officers in Gombe State recently, he said: “Farmers and other stakeholders should take advantage of NAIC services with a view to mitigating several disasters such as flood, drought, pest invasion and other farm losses that are not man-made.”
“NAIC only pays claims to the insured farmers and not to all victims of disaster and farm losses, adding that only the National Emergency Management Agency (NEMA) caters for all categories of disaster victims from holdings insured by NAIC and therefore assured farmers of prompt claims payment in the event of farm losses that are not deliberate or due to negligence,” he added.

Meanwhile, the Programme Manager of the Gombe State Agricultural Development Programme (ADP), Mr. Ishaya Nigale, said the exchange of ideas at the forum would lead to a better understanding of NAIC’s operations for the benefit of all categories of farmers in the state and help to raise the capacity of all stakeholders in the area of boosting food production and achieving food security in the country.

Protection of Agro-allied Investments
The management of NAIC) is also reassuring existing and potential investors in the country’s agricultural sector of its commitment to protecting and growing their investments.
The insurer also sympathised with investors whose farms and crops were ravaged by flood, drought, pest invasion and pestilences across the country, assuring that the corporation would go out of its way to ensure that they smile again to the banks.
The agricultural risks specialist insurer said the reengineering of its products and processes is to ensure that farmers who are involved in any form of insured losses are restored without unnecessary delays.

“The corporation has recently been reengineered to verify and pay the high volume of claims requests from all crops and livestock destroyed as a result of last year’s flood and any other disaster”, Garba said.

Partnership with CBN
NAIC is partnering the Central Bank of Nigeria (CBN) for the implementation of the Nigerian Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) programme.
The partnership was one of NIAC’s initiatives to enhance its operations for the purposes of improving insurance protection for agricultural and agro-allied credits in line with its statutory responsibility.
The insurer promised to reposition itself and become more relevant to government’s renewed effort to boost agricultural sector’s contribution to the nation’s Gross Domestic Product (GDP) by securing agricultural loans.

“NAIC as a major stakeholder in the CBN, NIRSAL programme, is repositioning itself to improve on its product offerings and services in line with our vision of remaining the pioneer and leader in agro-investment risk management,” the management said.

A product of the August 2010 Memorandum of Understanding (MoU) signed by the CBN and the Alliance for Green Revolution in Africa (AGRA), NIRSAL is expected to improve agricultural financing and deepen significantly agricultural insurance penetration in the country.
It is anchored on five pillars namely; risk sharing, insurance, technical assistance, agricultural bank rating system and bank incentive mechanism and targeted at increasing banks’ lending to “pooled” small farmers segment from 1.4 per cent to 7 per cent and about 3.8 million agricultural producers having access to agricultural credit by 2020.

Getting ready to be ahead of competition, NAIC is currently reengineering its operations, programmes and products to make them more relevant to the needs of farmers across the country.
“As part of its commitment to give adequate publicity to its operations and reach out to existing clients, NAIC has redesigned and changed its website. The major feature of the new site include updated information of the functions of the corporation, updates and an interactive portal which enables visitors to the site to communicate more easily with the corporation.
“We are also organising stakeholders’ workshops with bank desk officers and farmers to enable them reap the various benefits of agricultural risk management inherent in each NAIC policy taken. All these initiatives are aimed at repositioning the corporation to meet with the challenges of widened agricultural insurance market,” the management said.

Settlement of Agric Loan Dispute
The corporation is also exploring an out-of-court settlement for its two-year old dispute with 10 banks over the disbursement of the N200 billion agricultural loans without remittance of the insurance premium accruing on the transactions may soon be over.
“NAIC has agreed in principle to forge ahead but must be assured of the bankers commitment to increasingly patronise it in both the primary and non-primary agricultural business that banks could offer,” Garba confirmed.

When CBN announced that it disbursed a total of N133.11 billion to 139 beneficiaries as at 2011, NAIC dragged 10 banks to court for defaulting in remitting the insurance premium on such transaction to it as required of them.

The two parties agreed to settle their differences on the implementation of the Federal Government Commercial Agricultural Credit Scheme (CACS), a programme meant to boost agricultural production across the country after CBN directed these banks to comply with relevant sections of the NAIC Act, 1993 and seek out of court settlement of the dispute.
CACS was established as part of the Federal Government’s efforts at promoting commercial agricultural enterprises as well as to fast track development of the agricultural sector of the Nigerian economy.

It provides credit facilities to commercial agricultural enterprises at a single digit interest rate. These funds also complement other special initiatives of the CBN in providing concessionary funding for agriculture.
Under the scheme, the federal government set aside N200 billion for on-lending to farmers’ unions and co-operatives and to finance other areas of agricultural interventions within their various states.

Developing Underwriting Capacity
Worried that available capacity in the area of underwriting of agricultural risks is inadequate, the corporation prevailed on the insurance professional body, Chartered Insurance Institute of Nigeria (CIIN) to integrate agricultural insurance policies and operations into its educational and training programmes.
NAIC’s boss, who underscored the renewed interest of the Federal Government in agriculture and the need for the insurance industry to develop the necessary skills for delivering insurance services to this critical sector, said this would improve the quality and capacity of insurance practitioners in this aspect of insurance practice.

He acknowledged the fact that there is a lag in agricultural insurance skill and charged the professional body to develop robust training programmes in this area of insurance business.
Going forward, the corporation has advised CIIN to accommodate other government agencies having things to do with insurance including the National Health Insurance Scheme (NHIS) and Nigerian Deposit Insurance Corporation (NDIC) into its programme in order to deepen insurance awareness and penetration in the country.

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