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Conference on New Directions for Smallholder Agriculture. Nahu-Senaye Araya, CEO, Nyala Insurances The Ethiopian Experience On Micro Insurance Session 5, Breakout Session 11. Presentation Headings: I. PROFILE: Country & Financial Institutions II. NYALA’S EXPERIENCE A. MPCI

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Presentation Transcript
slide1

Conference on

New Directions for Smallholder Agriculture

Nahu-Senaye Araya, CEO, Nyala Insurances

The Ethiopian Experience On Micro Insurance

Session 5, Breakout Session 11

slide2
Presentation Headings:

I. PROFILE: Country & Financial

Institutions

II. NYALA’S EXPERIENCE

A. MPCI

B. WICI

III. LEASON LEARNT

IV. RECOMMENDATION

V. CONTACTS

We Care We Protect

slide3

Profile

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

We Care We Protect

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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: Nyala
  • Nyala Insurance:

- Small sized company

- Turnover: About US 10.0ml.

- Manpower: 270

- Activities: General, life and Micro Insurance

(Crop, Livestock, Life)

We Care We Protect

ii nyala s experience delivery channel
II. nyala’s experience delivery channel

POLICY HOLDER

CLAIMANT

PAYMENT STATEMENT

CERTIFICATE HOLDER

We Care We Protect

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B. nyala’s Experience: 2007 to date:-

B1. Multiperil Crop Insurance (MPCI) – Crop Yield, Flood, etc

We Care We Protect

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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’ 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.
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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 ? )
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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

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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
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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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IV. RECOMMENDATION ( Ethiopian context )

TO BE ENHANCED AND OR INTRODUCED BY THE MAJOR PLAYERS)

slide16

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
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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
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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-INSURANCE
  • 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
slide20

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.
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Contacts:

  • For InformationAND OR Assistance on Micro Insurance IN ETHIOPIA

Mr. Eyob Meherette

CEO, Nyala Insurance S.C.

Email: [email protected]@nyalainsurancesc.com

Tel: + 251 911 20 73 91

Fax: + 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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PLease continue helping the

poor farmers

Thank you

ad