Nyala Insurance introduces insurance for Afar, Somali pastoralists


Nyala insurance in collaboration with Mercy Corps Ethiopia and Farm Africa has launched asset protection based livestock insurance for pastoralists in Afar and Somali regions.
The insurance firm, which is well known for micro insurance products in agriculture has now included thousands of pastoralists in the two regions, affected by drought, through its micro insurance business.
The index based livestock insurance pilot program launched on Tuesday, August 7 at Semera, Afar is considered to be a sustainable input to mitigate challenges pastoralists face.
Negusu Aklilu, Chief of Party of Farm Africa BRACED Project, said that pastoralists in Afar and other areas are affected by drought, floods and other natural disasters and diseases. “In the previous trend providing livestock was considered an emergency support to rehabilitate the victims, but this method is very expensive,” Negusu said.
This kind of new approach will help the pastoralists mitigate or prevent challenges by providing insurance coverage as opposed to providing aid, according to the project Chief of Party.
“This pilot project will allow the pastoralists to get water, feed and medicine when climate based challenges occur and in the future they will follow the trend by buying premiums by themselves in collaboration with the government and the private sector,”  he added.
He explained that insuring people costs less than providing aid after disasters.
“Now at this time our role is to promote the initiative,” Negusu told Capital.
“During the last five decades rangelands in most pastoral areas of Ethiopia have undergone unprecedented changes which have manifested themselves in terms of marked deterioration of conditions,” Gifawossen Tessema, Director of Hide and Skin Directorate at Ministry of Agriculture and Natural Resources, said.
Product redesign and structuring are being conducted by a consulting firm called Pula Advisors and Funded by DFID through implementing organizations, Mercy Corps Ethiopia and Farm Africa, the project is expected to reach over 3,520 smallholder pastoralists in Awash-Gewane, Eli-Daar, Teru and Namalfane livelihood zones of Afar with the services of index based livestock insurance distributed with livestock drugs.
Solomon Zegeye, General and Micro Insurance Business Manager at Nyala Insurance, told Capital that the same number of households will benefit from the pilot in Somali region.
In the past Nyala has undertaken similar micro insurance services for low income farmers in SNNP in collaboration with Mercy Corps Ethiopia and Farm Africa and partners.
“The product in SNNP has been indemnity based livestock insurance, which includes multiple risks. The current one launched in Afar and Somali regions are focused on the risks of drought and asset protection,” Solomon Zegeye, General and Micro Insurance Business Manager at Nyala Insurance, told Capital.
Last March it launched in the Somali regions in collaboration with WFP. In its program with WFP 5,000 smallholder pastoralists were included.
“Even though the current product is similar to the preceding pilot with WFP, this one is more of technology based in terms of data collection, claim settlements and other related issues,” Solomon added.
According to the statement of Farm Africa, the product is one of the first of its kind being distributed along with livestock drugs sold by Agro- Vet shops. “The product employs the use of state of the art-technology, namely, an IT-based call center   for registration and claim processing-reducing paper work significantly. The product employs blended information sourced from satellite based remote sensing data and ground data- minimizing basis risks the common phenomena widely prevailing in index based insurance,” it added.
The product redesign and structuring is being done by a consulting firm called Pula Advisors and Funded by DFID through implementing organizations.
Nyala is not new to this type of micro-insurance at the same time it is pioneer promoting it by introducing crop insurance in the past. Besides that it has a target to expand the business in different regions in the country, according to the manager.
To achieve its short and long term goals set under micro insurance business strategies, the company has been working in partnership with international donors to test the marketability of products targeting the low-income population in general and smallholder farmers in particular. Having entered into a partnership agreement for provision of Climate Insurance for pastoralists and agro-pastoralists in Somali, Afar and SNNPR regions under a Memorandum of Understanding signed with Mercy Corps Ethiopia and Farm Africa under the Building Resilience and Adaptation to Climate Extremes and Disasters (BRACED) project.
Negusu Aklilu, Chief of Party of Farm Africa BRACED Project, said that in the past consultants have came via partner organizations instead of  insurance firms but currently Pula is working directly with Nyala to  allow the insurance firm to obtain the experts. “This kind of approach will allow the micro insurance sector to expand,” he added.
Nyala Insurance as a pioneer of agricultural micro insurance business in the Ethiopian insurance market has been striving to set up  a sustainable and commercially viable micro-insurance to serve the low-income population at the bottom of the pyramid  with  double objectives of addressing its corporate social responsibility and bringing reasonable and adequate return/profit for its shareholders in the long-run.