Nairobi — Low insurance penetration and high premiums are leaving millions of Kenyan and other African farmers exposed to climate shocks, industry players have warned, highlighting a growing disconnect between agriculture’s contribution to GDP and its insurance coverage across the continent.
Speaking during the Africa Reinsurance Climate and Insurance Workshop, Phocas Nyandwi, Regional Director at Africa Re, said Africa contributes barely 2 percent of global agricultural insurance premiums, despite agriculture accounting for about 30 percent of Sub-Saharan Africa’s GDP.
“Fewer than 17 percent of farmers are insured, highlighting the already low penetration,” Nyandwi said.
“This exposes farmers to shocks such as climate change. Very few people understand what agricultural insurance entails and how it can protect them from various climate risks. There’s also the issue of affordability — most farmers cannot afford the premiums,” he added.
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His remarks come as extreme weather patterns continue to threaten Africa’s food security and rural livelihoods, with droughts and floods destroying crops and livestock in several regions.
Isaac Magina, Agriculture and Climate Insurance Lead at Africa Re, said more investment is needed to strengthen the capacity of underwriters to manage climate-related risks.
“We have seen a spike in climate-related events that expose farmers to shocks such as droughts and floods. We want people to be aware and take action,” Magina said.
“Climate insurance is still a relatively new concept, and most underwriters are in the formative stages. To insure climate risks, one needs to leverage many parameters, and most of our underwriters don’t yet have these capabilities.”
Magina noted that Africa Re is focusing on building technical capacity within the insurance industry to better understand and underwrite climate-related risks.
Industry experts argue that scaling up agricultural insurance is crucial to cushioning farmers against climate shocks and ensuring food security in the region.
However, high premiums, limited awareness, and weak policy frameworks continue to hinder progress.
According to the Insurance Regulatory Authority (IRA), Kenya’s total insurance penetration stands at about 2.4 percent of the country’s Gross Domestic Product — far below the global average of around 7 percent.
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In the agricultural sector, insurance penetration remains extremely low, accounting for less than 1 percent of total insurance premiums.
The IRA attributes this to skepticism among farmers due to delayed claim settlements and lack of trust in insurers.
