Fortune, Ethiopia
November 16, 2008
WUDINEH ZENEBE
Nyala Insurance S.C. has received the first ever claim for natural disaster from farmers in East Shoa Zone of Oromia Regional State since it pioneered the issuing of a crop insurance policy to the farmers in that area two years ago.
Nyala issued the particular insurance policy for the first time in Ethiopia in collaboration with the Lome Adama Farmers’ Cooperatives Union, a famous consortium of farmers based in the zone.
Farmers who had taken out the insurance policy would be compensated in the even of a loss of harvest on their farms due to any natural disaster, like drought, flood, fire and unexpected rainfall.
In view of that, the farmers in the area who lost their harvest when unexpected rains fell the whole of the last week of October this year submitted claims for compensation.
In a letter Demere Demessie, general manager of the farmer’s union, wrote to the private insurance company, he requested the insurer to calculate the damages done and compensate the farmers accordingly.
“The kind of harvest loss on our farms legitimizes compensation claims under the crop insurance policy,” he told Fortune.
Established in 1997 with a 1.3 million Br capital, the Lome Adama Farmers‘ Cooperatives Union currently has over 25,000 members in areas like Modjo, Sodere, Adama (Nathret), Wolenchiti, Ade’a and Aposto.
East Shoa Zone is one of the areas known for surplus production of teff, wheat, barley and haricot in the country.
As crop policy was new to the insurance business in Ethiopia, only 334 members of the union bought the insurance policy.
The first batch of 120 members, for example, purchased the policy insuring crops with a total value of 665,000 Br from natural calamities.
Nyala sent its experts to the affected areas early last week to assess the extent of damage on the crops.
“Though it is only after the assessment that we would know how much we are going to pay, Nyala will not hesitate to compensate the farmers,” Nahusenay Araya, managing director of Nyala Insurance Company, told Fortune.
Nyala was established in 1995 with a subscribed capital of 50 million Br and paid up capital of 25 million Br. Among the 10 insurance companies in the country, Nyala leads the industry in terms profit.
Nahusenay said that the company aims to expand the crop policy it has launched in East Shoa Zone of Oromia, to the Amhara Regional State.
To implement this policy, Nyala has been undertaking studies since 2005, collecting 20 years of meteorological data to come up with the calculated premiums.
Though Nyala pioneers in issuing a crop insurance policy, the oldest insurance company operating in the country, the state-owned Ethiopian Insurance Corporation (EIC) was the first in mooting the idea to the Ethiopian context.
In 2005, EIC launched a pilot project of a weather insurance policy in cooperation with the World Bank. The chief purpose was to insure farmers when drought cropped up. Though experts say the two policies seem similar, they have distinctive characteristics as the crop policy includes all sorts of natural calamities like drought, fire and flood.
