Twenty-six years ago, the Federal Government established the Nigerian Agricultural Insurance Corporation (NAIC) to provide cover for farmers at a subsidised rate to mitigate their losses. However, many farmers are yet to benefit from it, because of lack of awareness. NAIC’s Managing Director Mr Bode Opadokun, in this interview with OMOBOLA TOLU-KUSIMO, speaks on his plans to achieve the firm’s objectives and address its shortcomings.
Despite being in existence for long, many farmers are not aware of NAIC. What is responsible for this?
Insurance is not generally accepted and it is worse with agriculture. But it is a general problem and I would say, in terms of appreciation of the work and value of agric insurance, it is on the increase. Presently, the elite have taken insurance seriously. Gone are the days when insurers used claims and settlements to sell insurance. Today, what people are looking at is how quick and prompt you settle claims.
For example, in NAIC, what we are trying to do is to, first of all, have internal restructuring and change among our people, because, I believe that it is only a satisfied internal customer that can make the external customers happy. If the staff are not happy, there is no way they can give their best to the external customers. There is a reorientation and change going on among the staff of the corporation. For the first time, in the history of the organisation, we held management retreat for three days. According to the information I gathered, the company had not had it in over 15 years. We need to stop thinking that because we are a public organisation, we can do anything we like. I am coming from the private sector and what I told them is that, yes, we are owned by the government but yet we must be accountable to the customers. It is not the government we are serving. We are set up for a particular purpose. We also discussed prospecting and maintaining new business. What some NAIC staff do is to go after transactions that are bank related which is compelling on the customer. The reorientation we are now giving to the staff by looking at the dynamics and prospects of maintaining business is how to identify customers beyond those that took facility from the bank. What about those that are operating their businesses with their own money; to what extent should we go to educate them to understand the benefits of such patronage.
We also discussed extensively the opportunity and role of NAIC in the new agricultural transformation agenda. We discovered that before the retreat; some staff did not understand some of the projects and are not aware of investments and other investors that are coming to the country. It is not possible to give what you don’t have. However, the good thing about our own business is that there is insurance opportunity from the reformative stage. From the moment a farmer or an investor agrees to invest in farming and bring equipment to plough the land, there is insurance opportunity. When the equipment arrives in Nigeria and they have to move them to the site, they’ll need guards in transit insurance and lots more. After planting, they will need to arrange cover against risk of flood and peril and even the yield needs cover. Presently there have not been arrangement on insurance based on inputs but we are partnering with Swiss Re which is the second largest reinsurance company in the world. We have an understanding with them to provide us with technical support on human capacity development and we will be signing a Memorandum of Understanding with them soon. Part of the reason why I am partnering with them is to ensure our personnel are trained and retrained. We also want to see how we can improve on our products. Presently, we based insurance on input whereas we should look at it from the point of yield. What I mean about input is the total cost you will incur in the form of planting on a particular seed. Whereas in other deviation what they are looking at is, what is the projection of yield that you want to have which sometimes is being used as the basis of indemnity? But that is based on different factors which we are still trying to work on in conjunction with the Renaissance Partners.
Weather index has also been in high demand by the customers but the challenge we have is getting the statistics that we need for us to be able to project into the future and base the premium. We want to get some of this information from the Nigerian Meteorological Agency (NIMET) in conjunction with the climate change agency. They are the ones to provide us with this information. But the good thing is that the present ministry of agriculture has been able to work on this project and a climate change committee has been set up where we are able to work on some of these factors. This project is very important. I stated it during my last meeting with the people anchoring the project and we discovered the role NAIC can play on the impact of the project.
What are you doing to ensure more farmers are aware of the scheme?
We are trying to sensitise farmers in the urban and rural areas properly through workshops and visits to farmlands to inform them of our services. This way, they will key into insurance voluntarily and not because they are compelled to do so.
What are your plans to realise the objective of the corporation?
From the feedback I got, now it is not how far but how well. There are so many things that we are trying to put together in the short time I assumed office. I found that there is not much awareness of NAIC generally. I found that not many people know it and if people don’t know the corporation as they should, how will they know the benefits, assistance or role it can play in the agricultural transformation agenda? We have noted all of these and are working on them, and I believe a positive result will be achieved soon.
Kindly give a brief insight into NAIC?
The primary objective of setting up the NAIC, amongst other things, was to implement, manage and administer agricultural insurance scheme at a subsidised rate as provided by federal and state governments. It is also to carry out insurance on commercial basis and operate other types of insurance business as may be permitted by the National Insurance Commission (NAICOM). As at today, the corporation can be said to have an edge and greater opportunity over other companies that underwrites general business as they do not have access to subsidised premium on crops and livestock policies. Moreover, the Federal Ministry of Agriculture and Rural Development Transformation Agenda focused primarily in making agriculture a business and not a development project through the formation of different schemes and programmes, such as the Nigeria Incentive Based Risk Sharing System (NIRSAL), Growth Enhancement Scheme (GES), Rural Finance Institution Building Program (RUFIN), Staple Crop processing Zones and Agricultural Value Chain. The schemes opened a large vista of opportunities which, we must harness for the betterment of stakeholders.
In simple context, our objective is not only to mitigate but eliminate financial losses of farmers who have been affected by flood, drought and other natural hazard. If you cannot mitigate, you cannot eliminate the extent of financial losses from crop losses. For instance, in 2012, drought affected over 130,000 farmers. Unfortunately, not many were insured because they were not aware of the existence of such cover. Majority of those insured were the medium and large- scale farmers, who invariably have accessed loans from the banks. These set of farmers insured their farms because the banks require that they have insurance before they can access loan.
What is the projection of the weather on farmer’s land and their produce?
We cannot give projections on weather. NIMET is in the position to do so. We do not know it now and that is because we are not doing Weather Index Insurance yet. The only thing we should be guided on is the level of flood we should expect. We are all living witnesses of what happened in 2012. We are told the rain of 2013 will be far more than the flood we are experiencing in 2012. But it was almost a drought that we had last year. The only thing we tried to do as a company is to see how we are going to support our portfolio properly by ensuring we have a good reinsurance in place. There are channels of distribution network that we are working on in conjunction with the Federal Ministry of Agriculture. It is really crop insurance but it is the process of selling the insurance that we are changing. It is going to be different because it will be ICT driven. We will sell it through the e-wallet system. We have advanced on it and we will distribute insurance to farmers through this system. The rainy season has started and the distribution of fertilisers has commenced. Before now government gives farmers two bags of fertilisers free but it was agreed this year, that the farmers will pay certain percentage of money. It will no longer be 100 per cent subsidised. What they will pay is about N2,750 for a bag of fertiliser. From analysis, we discovered that a bag will take care of a farming of one acre of land and they are entitled to two bags so that means they will be able to plough two fertilisers on two acres of land. What we plan to do is to promote insurance cover up to the tune of N20,000 per acre even though this is not the worth of the crop that is on the field. But what we try to do is to base it on a compensation that was paid by the Federal Government to each of the farmers affected in 2012 flood. Each of them was paid N22,000 as a form of compensation. So we are not providing indemnity but compensation for each of the farmers against the listed peril. This means that a farmer buys a bag of fertiliser for just N300 for a sum insured of N20,000. So as the farmer buys two bags and pay N600, he or she would have had insurance cover for N40,000. For instance, the flood that happened the other time or maybe there’s a fire, storm or drought, the farmer can go back to farming almost immediately.
We discover that it is the small scale farmers, micro farmers that are really affected. These are people whose primary objective is to take care of their family and that is why we have to bring down the premium to as low as N300 for a value of N20,000 sum insured.
Do you have a reinsurance scheme?
The only way we can also support and strengthen our own business is to ensure we have a proper reinsurance in place. If the 2012 flood happens again, we will not be able to meet up to our obligation. This is part of what we went to do in Zurich with Swiss re. They have a good brand and they will help us develop our human capacity here in Nigeria and at the end of the day, we will have more knowledge of how to do the business better.
What is your target in terms of premium income generation?
For me, it is not the premium income target that matters but the level of coverage and impact we are going to make among the farmers. Our target is how farmers are going to be more aware of the benefits and how to take advantage of it. On the database from the ministry of agriculture, we have 10.9 million registered farmers under the e-wallet fertiliser scheme. Our target is to at least provide cover for 50 per cent of these farmers; it will mean we have reach out to about 5 million farmers in Nigeria. This is our target.
But in terms of premium income, the year 2013 ended with about N900 million and it is a far cry from what we ought to achieve.
Another good thing we discover is that NAIC is the only company that underwrite agric in West Africa because of the peculiar nature of the risk attached to the line of business. So we are looking at how to extend our services to some countries. We will not provide reinsurance for them but provide technical and consulting services. We have two companies that approached us from Ghana and Liberia. They had a farmland they wanted to insure. We sent our own personnel to the countries to do the risk survey; agree the pricing and guide them. Then we will encourage the local operators in their country to take a certain percentage of the risk and place the balance with another reinsurance company within their market or place it with Continental Re in Nigeria. We will then charge our own fees. This and many more are what we are doing to improve our income.
Some farmers are complaining that NAIC is not present in their state. What are you doing to address the problem?
Part of our programme is how we will sensitise them more and partner with them through their various associations. We partner with cassava, fish farmers, and many others. We are also looking at many other states that we want to partner with and have branches in each of the zones. Presently we have branches in all the zones and if a farmer does not know us, that means the zonal officers have not been doing what they ought to do. The executives cannot be everywhere. But we will ensure they do what is expected of them henceforth.
Also, some farmers that have insurance complain of not being paid cla ims.
I will take it from the point of how professional we are. If you follow our story, there is a claim of about N80 million that I paid when I resumed in February this year. That claim has been there and adjusted since December last year. Some of us still have the idea of parastatals kind of thing that is different from the private sector. I am coming from the private sector and for me; any claim that is settled is a form of advertisement. I believe a satisfied customer will always talk about you in a good way to others and even market you. I see no reason why a claim that has been investigated by a loss adjuster and reported back to you as true should not be settled immediately. There is no point delaying such claim because you will not pay it twice. The sum of N50 million valued today cannot be compared to N80 million in three months’ time. So if we keep the money in the bank, we may not get up to N1 million but the publicity we would have gotten if we had paid the claim on time will be more. I will like to say to every farmer that has insured their farms and other stakeholders that this current management will not hesitate to pay claims. Part of the thing we draw up is three strategic business initiative. These are the fundamentals that we are working upon to make us grow and have a good brand.
In branding ourselves, we discovered that we need to work on our communication channels, not only to the external customer but even within the Corporation. We believe that, the same NAIC that is based in Sokoto is the same one at Bayelsa. Based on this, we are doing so much in our information technology (ICT) so that our business communication will improve. We are also redesigning our website. In the next one month or thereabout you will be able to log on to the new one. The speed of managing your data and communicating with both internal and external customer when you have a good ICT platform to manual is quite different. This affects our ‘Turn Around Time’ for our operation. Before now, it takes a long time to prepare policies. For example, from the understanding of our business central, everything from preparing and approving polices comes to Abuja. We are now going to have three head offices, one in Lagos, Kaduna and Port Harcourt. So some of the key people that are doing the authorisation in Abuja will be deployed to these three regions and will be empowered to underwrite. This I believe will definitely reflect on the ‘Turn Around Time’. Policy preparation that takes two to three weeks to prepare should take at most 48 hours for an ideal company. So by the time we centralise in authorizing this business, it will save the business process up to payment of claims.
It seems NAIC does not have the capacity to cover all agricultural risks. Recently, some fish farmers complained that the Corporation refused to provide cover for their juvenile and fingerling production. Why?
The challenge is that we don’t have cover for juvenile presently. The reasons are one, the mortality rate for juvenile and the challenge also has to do with the knowledge gap of some of these farmers. For example, if you want to supply fingerlings, it is not the same morning that you want to go and deliver that you will pack them into a basket, leave them and put them in an open keg and take them out. They cannot survive because the temperature while they were in the pond will be different from when you will put them in the basket and almost immediately put them on transit. They are very fragile at the stage and the mortality will be very high. Ideally, for you to move them tomorrow, it is like a baby that you handle with care. You suppose to take them neatly and preserve them in the new atmosphere for at least 12 hours for them to get used to it.
So, these are the areas we have serious challenge, where we also feel we need to re-educate some of these farmers. Then we have not been able to get reinsurance cover for fingerlings because of the extreme mortality rate in Nigeria. So what we have to do is partner with Swiss Re and it is part of the listed cover that we need for the farmers.
The Federal Government has banned fish importation, prompting many to invest in local production. But this is still without insurance which is supposed to cushion their loss. Does this not suggest that the initiative may not be successful?
Yes, it is going to be a challenge but I strongly believe it is going to get better. From the recent sensitisation programme for fish farmers by an NGO whom we partnered with, we found out that some of them did not even know how insurance can be beneficial to their business. So from time to time, we intend to sensitise them in each states. We are going to Ogun State now. We have gone to Kwara State and the Governor called me that same day that they want to partner with us on Songai farms. They also want us to meet their ministry of agriculture for other programmes. So I believe that if we reach out more, we will see the gain not only to the Corporation but also to the farmers.
