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Feasibility Study for Index-insurance and Awareness Raising - Nigeria

Agricultural insurance was introduced in Nigeria in 1987 through the creation of the Nigerian Agricultural Insurance Scheme (NAIS). In 1993, the private company in charge of underwriting and implementing the NAIS was dissolved and replaced by a public-sector corporation, the Nigerian Agricultural Insurance Corporation, NAIC.

Currently, NAIC writes a portfolio of crop, forestry, livestock, poultry and aquaculture insurance and also non-life commercial insurance lines. NAIC has received government support both in the form of the initial capitalization of the company and 50% premium subsidies on most classes of agricultural crop, livestock, poultry and aquaculture insurance. NAIC’s agricultural insurance scheme is closely linked to public sector credit provision: farmers accessing crop or livestock loans from national banks have to purchase compulsory agricultural insurance cover to protect the loans.
Project type:

Feasibility study for index-insurance and awareness raising

Requesting Agency:

Nigerian Agricultural Insurance Corporation (NAIC)

Project rationale:
  • The NAIC requested technical assistance from the World Bank in order to develop index-based crop insurance products to complement its traditional indemnity-based loss of investment cost policy
  • The areas covered under the NAIC application to GIIF included feasibility studies for the introduction of index insurance products, as well as a review and uplifting of the current regulatory and supervisory framework.
Country context:

Agricultural insurance was introduced in Nigeria in 1987 through the creation of the Nigerian Agricultural Insurance Scheme (NAIS).  In 1993, the private company in charge of underwriting and implementing the NAIS was dissolved and replaced by a public-sector corporation, the Nigerian Agricultural Insurance Corporation, NAIC. 

Currently, NAIC writes a portfolio of crop, forestry, livestock, poultry and aquaculture insurance and also non-life commercial insurance lines.  NAIC has received government support both in the form of the initial capitalization of the company and 50% premium subsidies on most classes of agricultural crop, livestock, poultry and aquaculture insurance. NAIC’s agricultural insurance scheme is closely linked to public sector credit provision: farmers accessing crop or livestock loans from national banks have to purchase compulsory agricultural insurance cover to protect the loans.

Key achievements:
  • A pre-feasibility study was completed for 5 Nigerian states (Kano, Kaduna, Lagos, Enugu and Cross River) for rain-fed maize and rice but concluded that the main risks faced by agricultural production in these states (pest and diseases, fire, and flood) were not subject of being indexed.
  • The study recommended investigating possible applications of remote sensing for the development of NDVI products at meso and macro level in the northern arid and semi-arid areas of the country.  
  • A study tour and training to India for a NAIC representative was organized
Key stakeholders:

The Central Bank of Nigeria (CBN), the National Bureau of Statistics (NBS), the Nigerian Meteorological Agency (NIMET), the National Insurance Commission (NAICOM), the Nigerian Insurance Association (NIA), and the National Agricultural Rural Credit Bank Ltd. (NACRDB)

Contacts:

Fatou Assah
Program Manager 
World Bank group
Tel: + 1 202 473 6160
Fassah@worldbank.org