Agriculture insurance is a customized insurance instrument that protects farmers from risks of loss brought about by weather dynamics, economic downturns and supply chain inefficiencies

NAIROBI, Kenya: USAID reports that the agricultural sector contributes to approximately 33 percent of Kenya’s Gross Domestic Product (GDP). Further, it asserts that the agriculture sector employs more than 40 percent of the total population and 70 percent of the rural population, making it a key element of Kenya’s growth and stability.

However, over the years due to a shifting climate and economic landscape, farmers and other agricultural stakeholders have found it more difficult to undertake agriculture without suffering losses. Floods, droughts, diseases, pests and global supply disruptions are just some of the elements that have contributed to agricultural stagnation in the region. Consequently, increased inflation has also stifled growth for farmers and curbed their ability to buy the necessary farm inputs or tools needed for efficient food and animal care as well as increased yields.

In addition, reduced yield has sometimes led to losses forcing farmers to default on their loans and lowered their creditworthiness. This in turn means that farmers are not able to access funds and resources that would lead to improved farm productivity. As such, for farmers, especially in developing markets, having a solid financial risk instrument such as insurance is critical for sustainability. However, for the insurance product to be practical, it needs to be specialized and affordable with a huge integration of agriculture specific needs and risks.

Agriculture Insurance

Agriculture insurance is a customized insurance instrument that protects farmers from risks of loss brought about by weather dynamics, economic downturns and supply chain inefficiencies. This type of insurance is critical seeing as some of the aforementioned shocks can easily affect farmers and undermine their ability to produce and make a living, eventually leading some to poverty. As such, agriculture insurance is key for expansion, growth and stability for both large and small-scale farmers.

That said, the uptake of agriculture insurance in developing markets has been low owing to a low level of awareness and perceived ‘high cost’ of the cover. As such, it is critical that farmers receive information and exposure to credible insurance products offered by compliant firms in the market. On the part of the insurers, this requires in-depth research and understanding of the agricultural ecosystem in order to develop market relevant insurance products.

For instance, CIC Agriculture Insurance is tailor-made for farmers and has been developed using insights from farmers and players in the agriculture sector. Comprising of both livestock and crop insurance, the products are designed to be relevant, affordable and accessible to farmers in Kenya.

The livestock cover compensates against death as a result of various perils namely uncontrollable diseases including epidemics, calving down and accidents affecting the animals, emergency slaughter on medical grounds, fire and related perils.

The crop insurance option covers against a combination of perils namely drought, excess rain, flooding, hail damage, frost damage, uncontrollable pests and diseases, fire and related perils.

These two products touch on key risk areas for farmers in Kenya as evidenced by recurrent losses occurred over the past few years. Touching on various geographical areas, the livestock and crop insurance products are accessible across the country.


Agriculture insurance is a tried and tested risk mitigation product. It not only reduces financial risk but also allows farmers to access credit and invest in farm inputs and technology that improves productivity. In addition, in case of losses, farmers are able to bounce back faster and engage in activities that improve production, reducing the chances of prolonged stagnation. Further, with agriculture largely contributing to economic growth and alleviation of poverty in Kenya, agriculture insurance is critical and should be a key consideration for all players in the sector.

The writer, Joseph Kamiri is the General Manager – Marketing and Customer Experience – CIC Group


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