the ethiopian experience on micro insurance
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The Ethiopian experience on micro insuranceTRANSCRIPT
Conference onNew Directions for Smallholder Agriculture
Nahu-Senaye Araya, CEO, Nyala Insurances
The Ethiopian Experience On Micro Insurance
Session 5, Breakout Session 11
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We Care We Protect
PRESENTATION HEADINGS:I. PROFILE: Country & Financial InstitutionsII. NYALA’S EXPERIENCE A. MPCI B. WICIIII. LEASON LEARNTIV. RECOMMENDATION
V. CONTACTS
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A.PROFILE A1. COUNTRY PROFILE Population: 85 mln. (UN 2010) – 83%
RuralArea: 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,
FlowerMain Food Crops: Wheat, Barley, Maize, TeffGov. Dev. Agents on Food Crops: 67,000
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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: NyalaNyala Insurance:
- Small sized company
- Turnover: About US 10.0ml.
- Manpower: 270
- Activities: General, life and Micro Insurance
(Crop, Livestock, Life) We Care We Protect
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II. NYALA’S EXPERIENCE II. NYALA’S EXPERIENCE DELIVERYDELIVERY CHANNEL CHANNEL
We Care We Protect
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PAYMENT STATEMENT
POLICYHOLDER
CERTIFICAT E HOLDER
CLAIMANT
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YearRegion
No. Household
Crop Type
Total
HaAve.
Sum
insured
‘000s‘Birr
Premium
‘000s Birr
Rate %
Claim‘000s Birr
Ratio %
TechnicalSupport
2007 Oromia
120 Wheat, Teff, HB
246.16 2.05
664 31, 4.71 Nil - Nyala
Covers + Swiss Re
2008 Oromia
“
827 Wheat, Teff, HB
777.83 0.94
3,076,
145 4.71 91
63.1 “
2009 Oromia
“
676 Wheat, Teff, CP
317.42 0.47
3,372,
179 5.31 No
- “
Tot ------ 1,623
1,341.41
0.83
7,113
355 5.0 91 25.74
B. NYALA’S EXPERIENCE: 2007 TO DATE:-B1. Multiperil Crop Insurance (MPCI) – Crop
Yield, Flood, etc
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Year Region No. Household Crop Total Ha Average
HA/HH
Sum insured’000s
Birr
Premium ‘000s Birr
Rate%
Claim“000s Birr Ratio % Support
2009Oromia 137 Haricot
Bean 159.75 1.17 639 73 11.50 309 420.6 WFP
Tigrai 200 Teff 21.0 0.11 115 28 23.90Nil Nil
OXFAM A.
2010
Tigray 1,309Teff, Wheat/ 147.05 0.11 974 357 36.64 Nil Nil
OXFAM A.
Oromia 290Barely,
Maize 208.00 0.72 418 83 19.96 Nil Nil IFPRI
Amhara 32Sorghu
m, & 12.75 0.40 26 3 10.20 Nil Nil IFPRI
SNNPR 452 Teff 199.18 0.44 396 73 18.57 Nil Nil IFPRI
Total 2,420 447.7 0.31 2,567 617 20.13 309 50.10 -
B2 . WEATHER INDEX CROP INSURANCE (WICI) – COVERS DROUGHT ONLY)
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Household Total HA Average HA/HH
Sum Insured
“000s Birr
Premium ‘000S Birr
Rate%
Claim‘000S Birr
Ratio% Support
4,043 2,089.14 0.52 9,680 973 6.38 401 41.2
WFP,
OXFA
M &
IFPRI
B3. COMBINED MPCI & WICI- 2007 TO 2010
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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
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LESSONS LEARNT A1. FARMERS’ SIDEFarmers 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.
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- Lack of awareness - Affordability of premium - Questions insurers’ motiveInsurance products so far
introduced not fully meet their needs ( Livestock/Health/Life ? )
Cont.
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A2. INSURERS’ SIDE Lack adequate/reliable data to ensure
quantity product design/costingCosting not actuarian derived - Unknown risks entail high premium - Major & reliable re-insurers show
little or no interestHave low human & infrastructure
capacity - Inadequate field visits
- Minimal training to own staff & farmers/union officials/Gov’t Dev. Agents
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A3. GOVERNMENT SIDENo. Regulation for Micro Insurance yetMI & MF activities not integrated in the
food security strategyCreated uneven competitive ground
for financial players. - MF income tax exempted - MF’s credit collection more or less
enforcable by governmentDevelopment Agents not being used
as financial educators of farmers
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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
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.C. IV. RECOMMENDATION
( Ethiopian context )
TO BE ENHANCED AND OR INTRODUCED BY THE MAJOR PLAYERS)
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A1. ALL MAJOR PLAYERS (Government, Insurers, Donors, and Banks)
STEP UP CUSTOMER’S EDUCATION AND TRAININGMAKE THE LIVELYHOOD OF THE FARMER THE
FOCAL POINT FOR ALL MI AND MF PROGRAMESHELP 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
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A2. GOVERNMENT:INTRODUCE LEGAL FRAMEWORK FOR MICRO
INSURANCELEGALIZE 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
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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.
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A4. COMMERCIAL INSURERS:ALWAYS WORK WITH RELIABLE RE-INSURANCEUSE CO OPS/UNIONS AS DELIVERY CHANNELS AND
OR AGENTSMAKE THE MI POLICY SIMPLE AND UNDERSTANDABLE.SETTLE OR REPUDIATE CLAIMS AS SOON AS
POSSIBLEINCLUDE 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
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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.
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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 91FAX: + 251 116 62 67 06
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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
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POOR FARMERS
THANK YOU