By Cynthia Ezekwe.
Nigerian Insurance firm, Leadway Assurance has launched an index-based livestock insurance (IBLI) product to provide unprecedented climate-smart risk management support to Nigerian livestock farmers, cattle herders and pastoralists.
Index-based livestock insurance is a unique insurance product that relies on real-time data and indices, such as weather patterns and livestock health indicators, to determine compensation for farmers in the event of losses.
According to Consultative Group on International Agricultural Research (CGIAR), IBLI as a viable solution for insuring livestock losses from covariate shocks in places where traditional insurance is not viable. It noted that unlike traditional insurance, index insurance uses an external indicator to assess losses on an aggregate level over a particular area. Index insurance is also considered less susceptible to moral hazard because payout is independent of an insured client’s individual behavior and adverse selection as the index is created from external variables unrelated to individual-specific risk.
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Leadway Assurance pointed out that its IBLI programme is an innovative insurance offering that would enhance the agricultural sector and reshape the insurance landscape in the country.
Speaking on the product, Fatona Ayoola, the head of Agric. Insurance at Leadway Assurance, expressed his excitement about this milestone in the insurance industry, stating that the introduction of IBLI is truly a game-changer for Nigerian farmers involved in the livestock production value chain.
According to Ayoola, farmers have been exposed to the unpredictability of weather conditions, stemming from climate change and other unforeseen events that could devastate their livestock, thereby affecting their livelihoods.
On his part, Tunde Hassan-Odukale, managing director, Leadway Assurance, said, “This launch represents a pivotal moment in our industry’s history. We are redefining insurance product development in Nigeria by leveraging technology and big data to create solutions that directly address the needs of our clients. Index-Based Livestock Insurance is not only a testament to our commitment to innovation but also a testament to our dedication to supporting the growth of Agriculture in Nigeria.”