STATEMENT MADE BY HON.

FRANK ANNOH-DOMPREH
MP FOR NSAWAM ADOAGYIRI AND CHAIRMAN FOR FOREIGN
AFFAIRS COMMITTEE
ON
AN AMENDMENT OF THE INSURANCE ACT 724 (2006): GLOBAL
TRENDS IN AGRICULTURAL INSURANCE INDICES

1) Mr. Speaker, I rise to make this statement to support parliamentary efforts

concerning the development of a comprehensive agricultural insurance regime in
Ghana, which includes quality agricultural insurance indices that are in line with
global trends.
2) Mr. Speaker, the Sub-Saharan African region have large population percentages
involved in crop production, among other agricultural activities. With the relatively
favorable weather conditions present, both small scale and large scale farming form
a significant part of the economic activities that are contributing to total GDP of
respective countries.
3) Recognizing the significance of agriculture’s influence on GDP, it is imperative that
holistic measures be put in place with the capacity to promote and sustain
agricultural activities, especially crop production and livestock rearing.
4) Mr. Speaker, this honorable house ensured the passage into law, Ghana’s Insurance
Act 724 in 2006. Since that time, so much has taken place that call for amendments
of the law accordingly. Trading Economics indicate that GDP from Agriculture in
Ghana averaged GHS 6.656 billion from 2006 until 2019, reaching an all-time high
of GHS 8.723 billion in the fourth quarter of 2018 and a record low of GHS 5.322
billion in the fourth quarter of 2007.
5) Mr. Speaker, our investments in agriculture ought to be backed by a capable
insurance regime that supports this growing industry. In simpler terms, our quest to
increase participation in the agricultural industry can be achieved by strengthening
the framework that provides investment-safety for agricultural activities that are
facing increased risk of capital loss in recent times. Present climatic conditions like

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 excessive rainfall leading to floods, are a global concern because of the adverse
effects they continue to have on crop production and food security, in effect, there
is reluctance to risk capital in farming activities especially by low income farmers.
6) Mr. Speaker, the National Insurance Commission (NIC), with support from the
Alliance for Green Revolution Africa (AGRA) have called for amendment of the
insurance Act 724 of 2006, since it did not incorporate agricultural insurance at the
national level. It was also through the efforts of the NIC, the Ghana Insurers
Association (GIA), the German Development Corporation (GIZ) and Ministry of
Food and Agriculture (MoFA) that the establishment of the Ghana Agricultural
Insurance Pool (GAIP) was achieved in 2011. GAIP developed the first agric-
insurance products and remains the largest insurance pool in Ghana.
7) Mr. Speaker, Ghana’s Insurance Act 724 currently has provisions that expand and
empower the NIC to perform its functions effectively. In the Act (724), being the
amendment in 2006, provisions for; (i) good corporate governance; (ii) clearer
liquidation procedures; (iii) appropriate offense penalties; (iv) whistle blowing
provisions; (v) removal of compulsory cessions that created an industry with the
State Insurance Company (SIC) as a monopoly; (vi) the separation of life and non-
life businesses; (vii) compulsory insurances; (viii) legal backing for the previously
existing Motor Compensation Fund and set up of a Fire Service Maintenance Fund,
among other amendments to strengthen legal framework and instill confidence in
the insurance industry. Nonetheless, agricultural insurance was not focused on.
8) To highlight the areas of my concern Mr. Speaker, this advocacy is not in itself
limited to simply making provisions in law for a comprehensive agricultural
insurance. One key aspect is educating our farmers on insurance benefits which will
encourage utilization of the service. Secondly, since post-harvest losses have proven
to be a major issue for local farmers, insurance policy must come in to alleviate the
situation when matters are being deliberated. The International Food Policy
Research Institute (IFPRI), indicated that, major crops such as mango, tomato,
cassava and yam recorded as much as 45.6%, 37.5%, 33.6% and 31.4% respectively

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 having the highest percentage of post-harvest losses, whiles other crops such as
maize, rice and cowpea recorded post-harvest losses of 14%, 13.5% and 10%
respectively.
9) Technology has a role to play in addressing harvest losses however, legislation is
the driving force. Since agricultural insurance has evolved with the development of
indices that provide a more practical framework for insurance programs to operate
in, the time is ripe to capitalize agricultural insurance.
10) These indices are well measured events that inform insures what kind of payouts
farmers will get based on the averages and estimations of events affecting the
farming population. In some jurisdictions, the indices are embedded in the insurance
contracts. Another way to appreciate the need for agricultural indices in insurance
is in the assessment of costs involved in traditional insurance procedures like the
verification of loss claims at individual farms.
11) Mr. Speaker, according to an Oxford Business Group article, northern Kenya
experiences severe drought every three to five years. In the years 2008-2011, it was
estimated that 9% of all Kenyan livestock died, costing USD $6.8bn, while crop
losses came to USD $1.2bn.
12) The largest Index Based Insurance for agricultural programs are in India, and
although heavily subsidized by government and compulsory for borrowers from state
banks, they still only insure about 30% of India’s farmers.
13) A study published by the GIZ in 2016 indicated that a total of 652,975 kinds of
agricultural insurance programs were offered in Africa. This figure is however
dwarfed by both the number of insurance programs offered in Asia, which reached
over 194 million and Latin America reaching 3.3 million programs respectively.
14) Mr. Speaker, appropriate agricultural insurance is a very gradual process to say the
least, and Ghana is still a long way from adequately supporting the majority who are
mostly middle and low income farmers. Experience gained over time will enable
stakeholders in the industry to determine an insurance scheme that will suit the
context and demands in Ghana. Deciding what the insurance programs will focus on,

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 like the staples being maize, rice, and some vegetable crops depends also on the
kind of response obtained from the insurance market. However, until policy
framework is fully setup, this gradual process cannot begin, and hence this clarion
call for amendments to the issuance Act.
15) Fortunately Mr. Speaker, Ghana has many countries to look to in order to understand
some of the complexities inherent in agricultural insurance. In the case of Japan, it is
revealed that acquiring insurance for certain crops like rice wheat and barley are
compulsory by law since they are main agricultural produce. Cattle farmers are also
mandated to specific insurances for livestock, which provides them veterinary care
as a means of ensuring local dairy products, are free of disease causing agents.
16) Agricultural insurance in Uganda also operates under the Government of Uganda’s
Insurance Act 6 of 2017. Uganda introduced the Kungula Agrinsurance Scheme
(KAS) in 2013 as a subsidy program for its farmers. The scheme offered two products
being the Weather Index Insurance for crops and livestock and; the All Risks
Mortality (ARM) cover, specifically for cattle. Based on outcome of their operation,
it revealed that in emerging markets, private sector insurance alone is hardly
sustainable in catering for small scale farmers. Consequently, the most successful
models are usually built on some form of public-private partnership.
17) The agricultural insurance market in China has experienced significant growth aided
by government premium subsidies and operational support since 2007. Their
government support is the driving force behind the growth.
18) One thematic issue that cannot be missed is the fact that agricultural insurance
adopts a gradual process that leads to benefits at the national level, and there is no
time to spare before taking the initial steps. Legislative framework must be existent
and fully operational at the national level to safeguard investments in agriculture
especially for farmers at the base of the industry pyramid and ensure that
participation grows rather than diminish or remain stationary.

I thank you for the opportunity Mr. Speaker.