NAIC: Farmers embracing cover, demands government 50% subsidy premium

The Managing Director, Nigerian Agricultural Insurance Corporation (NAIC), Mr. Bode Opadokun has commende the medium and commercial farmers’ disposition to insurance cover saying the small scale one should emulate in order to mitigate losses. He pleads for prompt government payment of 50% subsidy premium for farmers in his interview with food farm news as he advocated for government support in area of market for the producers. Read his excerpts below.

 

My name is Bode Opadokun, I am the managing Director and Chief Eexcutive officer of Nigerian Agricultural Insurance Corporation (NAIC), the only surviving insurance company owned by the federal Government and saddled with the mandate and responsibility to address the issue of risk management of agricultural insurance production in the country.

From your resumption as the MD of this corporation till date, what are some of the achievement you can point that has make a unique difference in the actualization of farmers taking insurance  more serious in the crops production?

Thank you very much I would like to start within in terms of the achievements. We start with internal orientation as you can only give what you have, you cannot give what you do not have. We started with management retreat which cut across the heads of the entire branches from all the states as we are able to draw a well defined mission and core value for the corporation. 

At the retreat we are able to come up with six strategic business initiatives for ourselves and corporation where we will be able to look at or create a pillar upon which the company can stand on. What we do at the retreat which of course bring about the new business plan that we are already using is ability to clearly identified what is expected of us with how we can  play this role to achieve positive impact that is tailored around our mandate for agricultural development in terms of mitigating losses. We observed that not many farmers know about our existence talk less of knowing the benefit they can derive from our activities for their farming progress. 

We have been to achieve more awareness creation in this regards through media and other means of publicity like organizing workshops and sensitizing farmers on our roles to them in the face of the Agricultural Transformation Agenda of the Federal Government of the past government which of course the present government will give the sector topmost priority.

 I always tell my staffs that change has already started in the corporation even before the now and what this means is that change is constant. We cannot continue to do the same thing the same way and still expect a different result. For you to have a different result there must be a different way at which we need to do things for a positive impact. Also we have been able to reach the farmers through the media different articles on newspapers and feature story in the electronics of television and Radio, and of course this interview is also meant for the same purpose. 

With this media strategy, the feedback we are getting is that more people are now aware of the existence of the corporation and the role we can play in the agricultural sector. Also we have been able to put in place an improved business process. Prior before now the business process we have through the soft ware is not as effective as what we now have as we are not fully computerized before my resumption. But now we have introduced ICT into our business operation in order to be more competitive among others as we have got software by which all our insurance products are well written. 

It is robust software which of course is going to have a very positive effect on our activities as our turnaround time will be shortened in terms of response time to our customers’ claims and settlement in particular which is the primary reason why we are in business. It is not a privilege for a client to be settled but it is their genuine right as it is when they are satisfied they can purchase more and tell others. Also, it is only a satisfied customer that will tell other people out there about our performance in terms of what we do and how it can add value to what they are doing. 

Also we have been able to enhance the status of our Lagos state office to a level of head office annex due to high traffic commercial activities in this centre as over 90% of all the Insurance companies have their head offices in Lagos due to volume of business, and fortunately the Lagos state government is also doing so well in agricultural activities as we have been able to provide insurance services in this regards to farmers in the state which has increased our premium income. By the virtue of the license that enables us to engage in other commercial insurance activities apart from agriculture is also more of the reason why our Lagos office has to be repositioned to do what we call general insurance business as you will agree with me that farming has gone beyond cutlass and hoes, but rather many people are now going into mechanized farming.

 The tractor and other farming equipment for production and processing are what we provide insurance cover for. In the time past most people though that all what we can do is crops and livestock insurance, but we have made them to realize that we can also provide insurance cover for the entire asset of the farming land as business venture. 

Now there are lots of activities that take place in agriculture from farm to table, in between these two, a lot of activities take place. For example the movement of produce from farm to the warehouse, and even while in the ware house, what happens in terms of risk to fire while maize or crop produce in the silo?  If there is fire incidence, all of this we have insurance cover for. And this has involved the repositioning of the Lagos office to meeting all these business opportunities towards registering our Corporation presence in the mind of people for more business transactions and what making people know about what we can do.

If I may ask, what is the response quality from the farmers especially?

I will say the response has been quite good, even though our expectation is quite higher than what we are presently getting, but that is business. The reason why I said that what we are getting is not quite to our expectation is because of the belief and the cost due to economic situation. Some have already got this attitude that once he or she prays to God; there will be nothing distrastrous that will happen to his farms or asset which in most time does not play out as they thought. With God all things are possible, and any evil fashioned against me shall not prosper.

 They believed so much on this faith more than doing the right thing that will mitigate their losses when there is any of such. Also some of them that show the willingness are being discouraged with the cost of insurance and what we are doing is making them to understand that insurance is part of the cost of any farming activity as once they realized this, it will become part and parcel of the practice in their placement of price in the face of cost and profit margin. Note that agriculture is no more poverty alleviation programme but rather a business venture of wealth creation where all precautions must be properly considered like insurance cover. If there is anywhere we are having challenges is with the small scale farmers’ attitude unlike the medium and large scale farmers who have wonderfully embraced the use of insurance as a mean of mitigating losses. We have a quite numbers of them with us now. 

Another area of challenge is the subsidy side as the decree that set up this corporation which has mandated us to charge 50% of all subsidies given to farmers with the understanding that where the farmer domiciled shall both the states and Federal Governments share the payment by 25% each. Invariably what we have been charging our farmers is half of the 100% premium when we are supposed to charge 100%, but we have not been able to get our premium subsidy payment back from government as expected when due. It is this payment we get as premium subsidy but not a subvention.. They give whatever they feel, not what they are actually expected to pay in terms of service rendered. 

We have been pushing our case through the FMARD and former economic minister in federal ministry of Finance is already put in the picture of our challenges. But we have not really got anything for now. We have also presented our predicament before the privatization agency under the presidency and both the two houses of agricultural committee and finance committee at the National Assembly. We will not relent until result is achieved to enhance corporation because government not paying the premium on time can adversely affects our operation by the time we are spending our reserve to subsidizing unpaid premium by the government. 

In the face of inadequate premium charges, how have you been responding to claims?

The issue is insurance is long time business and the training we are given is that premium you collected is not our own money and we have to properly take care of it because our business is futuristic in nature and we need to be very prudent in spending. You cannot see the future but you can only assume what could happen in the future. 

So you have to manage your resource in case when the expected happens, one should be able to meet your liabilities. So as a professional we always ensure rein insurance arrangement (i.e. The insurer of insurance) in place which means that we can pass our liability to rein insurance and that is the way we can secure ourselves meaning whenever there is claim that triggers beyond certain level, our rein insurance people will come into our rescue as we also have to pay premium to the rein insurance too to secure our continuityslot in case of any eventuality, we will be able to have a fall back position. 

That has one of the areas that have been helping us. The second one is to ensure we invest the available premium or resources that will have in a very good manner. We invest in the money market and some in the treasury bill rather than putting the money in the current account where charges are drawn. The proceed from this investment are used to cushion the effect of our challenges.   

We are generating income from the asset that we have like rents which has been helping us to carry our function just as we also make consultant services to generate income. Once a while we do go out to impact knowledge on people by way of developing the market at a cost  to us at times which we see as corporate social responsibility to developing the agricultural sector.

 

How would you react to assertion of farmers that claim are not pay promptly with recent avian influenza outbreak?

The ascertion I will say is ni the past not in the recent time because today we have received  formal letter from Lagos state government commending us for a recently paying claim to some of their farmers. I can show you the copy of the letter. We have also received such letter from Osun state government for settling claim on the QIIP just as farmers have call and sent text of commendation to us.

 In recent time we have more of commendation than condemnation do to our focused commitment to farmers’ genuine cases for immediate, but not to fraudulent ones. This is a way of attracting the interest of farmers to taking insurance risk very serious. On the avian influenza, what happens is that majority of those who experienced the losses had no insurance cover and those that really insured were settled. Our standard poultry policy does not cover to avain influenze as this is an extension under a standard poultry insurance cover. 

It only those with extension policy on standard insurance poultry that benefitted from the claims. But we had used the occasion to sensitized farmers as recently we had one with Nigeria Poultry farmers Association, o Lagos chapter. Things are more better than before and we still want to do much better as measure of improvement.

What the way you want the sector to repositioned for better performance of your corporation?

The government need to look at the funding and marketing in order to assistant farmers to get more sale for their produce to eradicate the issue of middle men. Also government should make farming loan a single digit for farmers as this will support and encourages more production, and lastly government should look at the policy that set NAIC in the areas where both states and federal Government have to pay their premium subsidy to us promptly as this will guarantee continuous existence of the corporation.