Insurance ? who needs it?
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CTA. 2008. Insurance ? who needs it?. Rural Radio Resource Pack 08/4. Wageningen, The Netherlands: CTA.
Permanent link to this item: http://hdl.handle.net/10568/57209
Why should subsistence farmers insure their livestock or other farm assets?
Insurance ? who needs it? Cue: What does ?insurance? mean to you? Do you pay insurance premiums on a regular basis, to get some financial security against risks? For people who own vehicles or businesses, insurance may be a necessity, but for the majority, it?s not part of our lives. So is insurance worth another look? For example, what about people whose wealth is contained in the animals they own. Should they be looking to insure their livestock? Recently, a new kind of insurance has become available, which targets not the rich, but those with only a few assets. It?s called micro-insurance, and Busani Bafana has been investigating what it offers. IN: ?Though a relatively new concept ? OUT: ? is still at that low level.? DUR?N: 3?43? BACK ANNOUNCEMENT: Busani Bafana, reporting from Bulawayo in Zimbabwe. The interview comes from a resource pack produced by CTA. Transcript Bafana Though a relatively new concept, micro-insurance today covers millions of people in Africa and Asia. Our guest today is Mr Kay Mahlangu, an insurance specialist with Jupiter Insurance, a company in Bulawayo, Zimbabwe. He advises farmers on a variety of issues related to insurance. He will be talking to us about the concept of insurance for smallholder farmers. Insurance gives smallholder farmers a cover for themselves, their livestock, their equipment and other assets against natural disasters such as fire, hailstorms, or even theft. Mr Mahlangu, I want to find out who this insurance is really suitable for. Mahlangu The insurance is suitable for every farmer, whether he is a small-scale farmer or a commercial farmer. Because the concept of insurance is to protect the farmer. Whether a farmer is a commercial farmer or a small-scale farmer, the protection needed is exactly the same. Especially the small-scale farmers, they need finance. These funds can only be obtained from financial institutions. For a financial organisation to release the funds they would want some form of security. For a small-scale farmer the security might not be available, but in Jupiter we introduced livestock insurance, which is the property which the farmer has. If you get your livestock insured, then you have the facility to source funds from any financial institution or from any commercial bank. Bafana What then are the advantages of insurance, particularly of insurance that covers smallholder farmers? Mahlangu If a farmer has sourced funds from a financial institution, in the event of a loss the farmer will be made comfortable, because he will not be called upon to settle the moneys that have been leant to him by the financial institution. The insurer will cater for all those losses. Bafana Looking at a farmer who may not have borrowed money from a financial institution, who has his own, or her own assets, would this type of insurance cover them? Mahlangu The insurance is not only to cover those that need financial assistance. Even those that are in a sound financial position, they still need insurance because insurance caters for unforeseen eventualities, as far as life is concerned. Bafana Insurance is a big undertaking and also a risky business. In the light of natural disasters, such as flash floods, seasonal droughts and wildfires, which have been linked to climate change. How then can insurance be made affordable to poor, subsistence farmers? Mahlangu I think in fact the premiums we request are not that high. The premiums are flexible depending on the class of business we are to offer. Bafana And lastly Mr Mahlangu, do insurance specialists like yourself get down to the level of smallholder farmers, to actually understand their insurance needs, if at all? Mahlangu The only problem we are facing with the smallholder farmers, they are scared to insure. Not just because they don?t have the capacity to pay the premium, but they have a tendency of thinking the insurance is a white man?s concept. That is why, in fact, they are rather reluctant, or the number is still at that low level. End of track.