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UGI encourages crop insurance cover for farmers

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United General Insurance has called on farmers and those in the agriculture sector to realise the importance of insuring as a means of sustaining the industry.

Chibwe: The agricultural sector is important Chibwe: The agricultural sector is important

UGI Chief Operations Officer, MacDonald Chibwe said Crop Insurance cover is designed to provide an insurance solution to drive the growth of agriculture sector in the country.

Speaking at an agricultural networking dinner function organized by MCCCI, UGI emphasized the importance of insuring crops and securing them in case of natural disaster and man-made factors that can destroy crops.

“Traditionally, insurance has been more conventional; insuring property for organisations, the elite people and middle-class segment of the population leaving out more than 85% of the population involved in agriculture. This is why UGI is taking measures to ensure that the core of this country’s economy is properly covered and financially secured,” Chibwe said.

“After all fulfilment with the regulator and reinsurers we successfully completed a pilot stage of Weather Index Insurance that covers seed loan administered to farmers by Afrasian and MOST in 2017,” he added.

He said Weather Index Crop Insurance - WII is the model that is currently deployed by UGI and is highly effective.

“WII is relatively a new crop production risk management tool. Unlike traditional insurance that insures against crop failure, WII insurers against a specific event or risk e.g. rainfall deficit or drought. The perils covered include one or two weather events like excessive rainfall, drought or dry spells,” he said.

The Chief Operations Officer said the UGI crop insurance policy is unique in the sense that it uses satellite data unlike other crop or agriculture insurance policies being offered on the market.

“A significant difference is the data source. While other players use data from weather stations, UGI uses satellite data. Data in this model is obtained from satellites hence more accurate in a way reducing grounds for contention on claim triggers,” said the Chief Operations Officer.

Chibwe added that pay-outs in WII are triggered automatically by the occurrence of a specific weather event or risk.

“The advantages are that it is cost effective since no field assessment is required, once an event occurs, pay outs are made and it addresses the two major drawbacks of traditional crop insurance, moral hazard and adverse selection,” Chibwe added.

He encouraged farming organizations, tobacco farming and buying companies and other stakeholders to seek insurance services from UGI for their cooperatives and growers’ incentive schemes.

“Financial Institutions can also partner with UGI when offering capital to farmers. These partnerships will ensure that the agricultural ecosystem is fully backed from a financial perspective and that is key to ensuring growth and sustainability in the industry.

“The economy of Malawi is heavily dependent on Agriculture with more than 85% of the population involved in small scale farming. It is therefore vital that this sector is protected against unforeseen events and known risks that retard progress. UGI is committed to working toward this mission,” explained Chibwe.

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