Lagos — Swiss Re has suggested ways insurance can help solve food insecurity globally particularly in insecure food countries like Nigeria.
Swiss Re said in a recent report that insurance can play a big role in aligning production incentives, raising awareness of the importance of risk mitigation and encouraging investment in agricultural efficiency.
Swiss Re's Asia chief economist Clarence Wong said in the report that "Insurance is an integral piece of the puzzle"- the food insecurity puzzle.
The report's co-author Amit Kalra said: "Tapping the full power of agricultural insurance in emerging markets requires a lot: proactive and enabling government policies, supportive infrastructure, innovative products, cost-effective business models, new distribution channels, and advanced technology.
"Much of this can be achieved by partnering with insurers."
The report advocated a multi-stakeholder approach to achieve food security which includes: Using agricultural insurance to manage risks, stabilise farm income, Encouraging investment to strengthen the food chain infrastructure.
It indicated that agricultural insurance can act as credit collateral.
The study also found that one in eight people in emerging markets suffered from hunger and malnutrition.
Out of the 850 million people suffering from hunger worldwide, 98 percent are located in emerging markets. The Asia-Pacific region has the greatest number (528 million), followed by sub-Saharan Africa (237 million).
According to the National Bureau of Statistics in 2010, 112 million (67 percent) of Nigeria's population (167 million) live below the poverty line. A significant number of the poor Nigerians don't have sufficient food.
Yet, agricultural insurance penetration remains very low in emerging markets.
In Nigeria for instance, according to a recent study by the National Insurance Commission (NAICOM), 75 million Nigerians need micro insurance, most of them farmers.