The Insurance and Pensions Commission (IPEC) is drafting a regulatory framework to implement agricultural index-based insurance that will provide insurance solutions for smallholder farmers vulnerable to climate change.
IPEC first announced the project in May 2023, saying it was a partnership with the International Finance Corporation (IFC), reported NewsDay Business.
“IPEC came up with an agricultural index insurance policy paper which was approved by the government,” IPEC insurance supervision director Ms Sibongile Siwela said in emailed responses to NewsDay Business.
A local study conducted by IPEC showed that there is an appetite for agricultural index-based insurance from both the supply side and the demand side. Findings from the study were presented to stakeholders in April.
“The project has gone very well and in line with its scope, which was anchored on three outputs, which are: a feasibility study on agricultural index-based insurance in Zimbabwe, capacity building of both Ipec and industry personnel, and development of a regulatory framework,” Ms Siwela said.
The regulator also revealed the enrolment of about 4,000 smallholder farmers in an agricultural index-based insurance pilot covering the 2023-24 farming season.
Ms Siwela also cited some challenges facing the agricultural insurance sector which include inadequate data, inappropriate insurance products, low levels of awareness of insurance as a risk mitigation tool, and the perceived complexity of insurance.