Index Insurance Workshop

1. PRESENTATION ON NYALA INSURANCE
EXPERIENCE ON EPIICA/WEATHER INDEX
INSURANCE
BY: SOLOMON ZEGEYE
Underwriting Manager
DECEMBER 3, 2015
Capitol Hotel, ADDIS ABABA
ETHIOPIA

2. Contents of Presentation
1. General Introduction
2. Project feature and pilot objective
3. Pilot Areas
4. Project partners
5. Performance of Nyala –Premium Production and
payout
6. Challenges
7. The Way Forward

3. 1. General Introduction
 Agricultural crop production and livestock rearing are the key
sources of income for most rural households in Ethiopia
 Enhancing the production and productivity of these activities
is crucial to achieve food security and reduce rural poverty
 Nearly 55% of small holder food producers operate on one
hectare or less.
 Yield intensification is the most viable way as land is scarce.
 Access to finance limits the adoption of improved agricultural
technologies required for yield intensification
 The presence of correlated weather shocks and absence of
collateral obstacle commercial lenders to avail credit to rural
households

4. 2. Project feature and Pilot Objective
Ethiopian Project on Interlinking Insurance for Credit in
Agriculture(EPIICA)
 EPIICA is an innovative project aimed to avail insurance and credit
for farmers trapped in low investment-equilibrium
 It is an innovative approach which brings for the first time a private
commercial bank in rural financing using insurance policy as partial
collateral
 To generate an experimental control group evidence and thereby
measure the impact of the project on:
1. Farm productivity and household welfare
2. Commercial viability of micro insurance and micro credit

5. 3. Pilot Areas
Region Zone Woredas Kebeles
Standalone Interlinked Controlled
Amhara North Shewa 4 17 17 28
Amhara West Gojjam 1
Amhara South Wollo 1

6. 4. Project Partners
 Nyala Insurance
 Dashen Bank
 I4 Research team(University of California, FAO and JRC-EU)
University of Athens and Ethiopian Economic Association
 Bureau of Agriculture Amhara Region
 National Meteorology of Ethiopia
 Unions and Primary cooperatives

7. 5. Performance of Nyala on EPIICA/ I4 –Premium Production
Year Region No farmers Crop
Type
Hectare Sum Insured Premium
2012 Amhara 200 Teff,
Maize
59.18
340,283 45,529
2013 Amhara 5,483 Teff,
Maize
241.02 4,981,229
832,698
2014 Amhara 254 Teff 83.00 473,615 33,787
2015 Amhara 718 Teff 248.5 1,429,533.1 102,241.94
Total 6,655 631.7 7,224,660.1 1,014,255.94

8. 5. Performance- Claims Settled Under EPIICA Project
Year 2012
Woreda Crops grown No of
Kebele
No of
Farmers
Claim Paid
(ETB)
Tewledere Teff 4 30 6,607.33
Qewot Teff,sorghum,wheat 3 28 17,578.84
Efratana Gidem Teff and sorghum 2 19 3,048.95
Antsokiana Gemza Teff, Sorghum 2 14 5,469.55
Adet Teff 2 20 5,838.83
Total 13 111 38,543.50

9. 5. Claims Settled Under EPIICA Project……
Year 2013
 Tewledere woreda represented by Worebabo station registered
frequent payout and it was also severe as compared to other districts
Woreda Crops grown No of Kebele No of Farmers Claim Paid
Tewledere Teff 9 1,638 181,534.82

10. 6. Challenges
1. Despite the existence of apparent demand for the interlinked
product, its uptake was constrained by failure to release credit
2. Competitors better response: both micro credit and private
commercial banks availed credit timely with better offer.
3. Delivery Channel: Unions and cooperatives lack basic financial and
record management skill.
4. Regulatory Problem: Absence of legal framework defining unions
and cooperatives to serve as agent of micro insurance. Due to this
we were unable to pay remuneration as commission for their
intermediary role.
5. High Premium rate: for some of the villages the premium rate went
as high as 39% and this limits uptake at early years
6. Reinsurance: Swiss Re failed to provide support due to scale
problem(small premium)

11. 6. Challenges…
7. Absence of Prime Mover: In most WII pilot projects,
donors/development partners who operate locally are behind the
projects. For example OA and WFP for R4, MOFE/UNDP for PAA
project.

12. 7. Way Forward
1. Building capacity
 Capacity of delivery channels in terms of management
and insurance knowledge
 Technical skill of staffs of insurance company in design
of products
 Regulatory and supervisory capacity of regulator
 Data infrastructure to obtain weather and agricultural
information
2. Regulatory Issues
 Regulation on Micro insurance agency
 Regulation on realization of national reinsurer

13. 7. Way Forward
3. Collaboration and Commitment
 Effective collaboration required among partners for
better performance in micro insurance
 Micro insurance requires a bit further commitment as
much of the work is done at grass root level among rural
communities
 Other private insurers also need to take part in weather
index insurance

14. Thank You for Your Attention