Transcript The Ethiopian experience on micro insurance

Conference on
New Directions for Smallholder Agriculture
Nahu-Senaye Araya, CEO, Nyala Insurances
The Ethiopian Experience On Micro Insurance
Session 5, Breakout Session 11
NYALA INSURANCE S.C.
PRESENTATION HEADINGS:
I. PROFILE: Country & Financial
Institutions
II. NYALA’S EXPERIENCE
A. MPCI
B. WICI
III. LEASON LEARNT
IV. RECOMMENDATION
V. CONTACTS
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A.PROFILE
NYALA INSURANCE S.C.
A1. COUNTRY PROFILE
 Population:
85 mln. (UN 2010) – 83% Rural
 Area:
1.13 mln. Sq. kms.
 Life Expectancy: 56 years (Male) 59 years
(Female)
 GNP per capita: US $ 330 (WB 2009)
 Main Export: Coffee, Hides, Oil Seeds,
Flower
 Main Food Crops: Wheat, Barley, Maize, Teff
 Gov. Dev. Agents on Food Crops: 67,000
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NYALA INSURANCE S.C.
A2. PROFILE FINANCIAL INSTITUTIONS
& NYALA’S





No. of Commercial Banks: 14 (3 Gov’t. 11 PVT.).
No. of Micro Finance:
30
No. of Insurance Companies: 12 (1 Gov’t + 11 Pvt)
Only one in Micro Insurance: Nyala
Nyala Insurance:
- Small sized company
- Turnover: About US 10.0ml.
- Manpower:
270
- Activities: General, life and Micro Insurance
(Crop, Livestock, Life)
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NYALA INSURANCE S.C.
II. NYALA’S EXPERIENCE
DELIVERY CHANNEL
INSURER
CLAIM
SETTLEMENT
CLAIMANT
PAYMENT
STATEMENT
CO-OPS/
UNION
FARMER
UNDERWRITING
CO-OPS/
UNION
FARMER
POLICY
HOLDER
CERTIFICATE
HOLDER
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NYALA INSURANCE S.C.
B. NYALA’S EXPERIENCE: 2007 TO DATE:B1. Multiperil Crop Insurance (MPCI) – Crop
Yield, Flood, etc
Year
Regi
on
No.
Household
Crop
Type
Total
Ha
Sum
insured Premium Rate
Ave.
‘000s‘B ‘000s Birr %
irr
2007 Oro
mia
120
Whe 246.16
at,
Teff,
HB
2.05
664
31, 4.71
2008 Oro
mia“
827
0.94
3,076,
145 4.71
2009 Oro
mia“
676
Whe 777.83
at,
Teff,
HB
Whe 317.42
at,
Teff,
CP
Claim
‘000s
Birr
Nil
Techn
Ratio ical
%
Suppo
rt
-
63.1
Nyala
Cover
s+
Swiss
Re
“
91
0.47
3,372,
179 5.31
-
“
No
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B2 . WEATHER INDEX CROP INSURANCE
(WICI) – COVERS DROUGHT ONLY)
Region
NYALA INSURANCE S.C.
Year
No.
Household
Crop
Oromia
137
Haricot
Bean
Tigrai
200
Teff
2009
Tigray
Teff,
1,309 Wheat/
Oromia
290
Amhara
32
SNNPR
452
2010
Total
2,420
Barely,
Maize
Sorghu
m, &
Teff
Total Ha
Average
HA/HH
159.75 1.17
Sum
insured’000s
Birr
Premium
‘000s Birr
Rate
%
639
73 11.50
0.11
115
28 23.90
147.05 0.11
974
208.00 0.72
Claim
“000s Birr
Ratio %
Support
420.6
WFP
Nil
Nil
OXFA
M A.
357 36.64
Nil
Nil
OXFA
M A.
418
83 19.96
Nil
Nil
IFPRI
0.40
26
3 10.20
Nil
Nil
IFPRI
199.18 0.44
396
73 18.57
Nil
Nil
IFPRI
447.7 0.31
2,567
617 20.13
309
50.10
21.0
12.75
309
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NYALA INSURANCE S.C.
B3. COMBINED MPCI & WICI- 2007 TO 2010
Household
Total HA
Average
HA/HH
Sum
Premium
Insured
‘000S Birr
“000s Birr
4,043 2,089.14 0.52 9,680
Rate
%
Claim
‘000S Birr
Ratio
%
Support
WFP,
973 6.38
401 41.2
OXFA
M&
IFPRI
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NYALA INSURANCE S.C.
B3. Associates: Financial & Technical
Assistance (Past & Future)
National:
 Commercial Banks (Dashen Bank)
 Association of Micro Finance
 Micro Finance
 National Metrology Authority
 Ministry of Agriculture
 Co-ops & Unions
International:
IFPRI, FAO, OXFAM AMERICA, ILO,
WB, SWISS-RE
LESSONS LEARNT
NYALA INSURANCE S.C.
A1. FARMERS’ SIDE
 Farmers with no expectation show great
interest
- Minimize the mental & physical
pressure coming from Creditors
- Use of Insurance policy as collateral
improves their bankability
- Improve their negotiating power with
Creditors
 Cooperatives/Union willing & capable to
act as policy holders on their members
behalf.
NYALA INSURANCE S.C.
Cont.
 Draw Backs
- Lack of awareness
- Affordability of premium
- Questions insurers’ motive
 Insurance products so far
introduced not fully meet their
needs ( Livestock/Health/Life ? )
NYALA INSURANCE S.C.
A2. INSURERS’ SIDE
 Lack adequate/reliable data to ensure
quantity product design/costing
 Costing not actuarian derived
- Unknown risks entail high premium
- Major & reliable re-insurers show
little or no interest
 Have low human & infrastructure
capacity
- Inadequate field visits
- Minimal training to own staff &
farmers/union officials/Gov’t Dev. Agents
NYALA INSURANCE S.C.
A3. GOVERNMENT SIDE
 No. Regulation for Micro Insurance yet
 MI & MF activities not integrated in the
food security strategy
 Created uneven competitive ground for
financial players.
- MF income tax exempted
- MF’s credit collection more or less
enforcable by government
 Development Agents not being used as
financial educators of farmers
NYALA INSURANCE S.C.
D. DONOR'S Side
 Spend too much time and money on
pre studies/research
 Obssesed with paper work
 Give less emphasis on human &
infrastructure capacity building
 Promote short term year- to- year
programe.
 Need to revisit capability &
acceptabilty of their staff
NYALA INSURANCE S.C.
IV. RECOMMENDATION
( Ethiopian context )
TO BE ENHANCED AND OR
INTRODUCED BY THE MAJOR
PLAYERS)
NYALA INSURANCE S.C.
A1. ALL MAJOR PLAYERS
(Government, Insurers, Donors, and Banks)
 STEP UP CUSTOMER’S EDUCATION AND
TRAINING
 MAKE THE LIVELYHOOD OF THE FARMER
THE FOCAL POINT FOR ALL MI AND MF
PROGRAMES
 HELP THE FARMER FROM THE MENTAL
AND PHYSICAL PRESSURE COMING FROM
THE MF AND INPUT SUPLIERS.
 FORCED TO PAY HIGH INTEREST RATE
 (OVER 2.5 TIMES COMMERCIAL RATE)
 FORCED TO JOIN THE “G5 LOAN
GUARANTEE” SYSTEM
NYALA INSURANCE S.C.
A2. GOVERNMENT:
 INTRODUCE LEGAL FRAMEWORK FOR
MICRO INSURANCE
 LEGALIZE COMMERCIAL BANKS AND
INSURERS TO INCLUDE MI AND MF
BUSINESS IN THEIR PORTFOLIO
 CREAT LEVEL GROUND FOR ALL PLAYERS
TO AVTIVELY INVOLVE IN MI AND MF AREA.
 USE GOV’T DEVELOPMENT AGENTS AS
FIELD FINANCIAL TRAINERS AS WELL
 INCORPORATE MI AND MF ACTIVITIES IN
THE FOOD SECURITY STRATEGY
NYALA INSURANCE S.C.
A3. INTERNATIONAL DONORS:
 MINIMIZE THE TIME AND MONEY SPENT
ON PRE STUDY/RESEARCH.
 CONSIDER A 3 TO 5 YEAR PROGRM (NOT
YEAR 2 YEAR) WITH DIMINISHING
SUBSIDY AMONT TO FARMERS OVER THE
PERIOD
 GIVE PRIORITY TO THE DEVELOPMENT OF
STAFF OF INSURES/UNIONS/MF.
 REVISIT THE CAPABILITY/ACCEPTABILITY
OF OWN STAFF/CONSULTANTS.
NYALA INSURANCE S.C.
A4. COMMERCIAL INSURERS:
 ALWAYS WORK WITH RELIABLE REINSURANCE
 USE CO OPS/UNIONS AS DELIVERY
CHANNELS AND OR AGENTS
 MAKE THE MI POLICY SIMPLE AND
UNDERSTANDABLE.
 SETTLE OR REPUDIATE CLAIMS AS SOON AS
POSSIBLE
 INCLUDE MI AND MF ACTIVITIES IN THEIR
BUSINESS AND INTRODUCE A MINUMUM
%AGE OF MI AND MF BUSINESS IN THEIR
PORTFOLIO
 INTRODUCE ALWAYS HIGH QUALITY PRODUCT
DESIGN AND RISK RELATED PREMUIUM
NYALA INSURANCE S.C.
A5. COMMERCIAL BANKS AND
CREDITORS:
 ACCEPT POLICY FROM REPUTABLE
INSURER AS LOAN COLLATERAL
 TAKE THE BUSINESS AS SOCIAL
CONTRIBUTION AND OR IMAGE BUILDING
IN THE SHORT TERM WITH THE VIEW OF
ITS LONG TERM BUSINESS POTENTIAL
AND PROFITABILITY.
NYALA INSURANCE S.C.
V. CONTACTS:
 FOR INFORMATIONAND OR ASSISTANCE
ON MICRO INSURANCE IN ETHIOPIA
MR. EYOB MEHERETTE
CEO, NYALA INSURANCE S.C.
EMAIL:
[email protected]
[email protected]
TEL: + 251 911 20 73 91
FAX: + 251 116 62 67 06
NYALA INSURANCE S.C.
FOR COMMENTS/QUERRIES ON
WHAT HAS BEEN PRESENTED
HERE
NAHU-SENAYE ARAYA
ADVISOR/CONSULTANT
EMAIL:
[email protected]
TEL: +251 911 20 73 89
FAX + 251 116 62 67 06
NYALA INSURANCE S.C.
PLEASE CONTINUE HELPING THE
POOR FARMERS
THANK YOU