Benjamin, what is REGIC’s story?
Benjamin: Royal Exchange General Insurance Company Limited (REGIC) is a subsidiary of Royal Exchange Plc, which was established in 1918 and is Nigeria’s first insurance company. Our mission is to attain leadership in the financial sector and provide the highest quality services in accordance with ethical practices and norms to our clients while ensuring adequate returns to our stakeholders. Our clients and our country face a range of challenges from a growing population to the threats of climate change. As a company we want to thrive with the country and our clients by supporting them. We aim to help secure the livelihoods and property of our clients and create a positive impact on their lives and communities.
Why does REGIC focus on agricultural insurance and what is your main target group?
Benjamin: For us, agriculture coverage ticks all the right boxes and can help the company unlock doors to new clientele and market reach in a way that other commercial lines of coverage cannot. We are specifically focusing on the small holder segment, which currently faces risks from climate change consequences to which our insurance packages offer solutions.
Agriculture is one of the largest economic sectors in Nigeria. It accounts for over 20% of GDP and 60% of total employment. Now, 80% of agricultural production is handled by small holder or subsistence farmers that engage largely in rain-fed farming. This sector of the agrarian population is particularly vulnerable to the effects of climate change. Climate change poses a significant threat to the livelihood of farmers, their household, and the overall agricultural sector. The overarching implication is that the food security and productivity of Nigeria’s growing population and Africa’s most populous nation are under threat.
Currently, about 30 million small-holder farmers operate in rural areas. With limited or no access to agricultural insurance services they have no means to protect themselves against the economic impact of crop shortfalls or harvest losses triggered by climate risks such as droughts, floods and heat waves. With the largest population in Africa and one of the lowest insurance penetration levels within the continent, Nigeria’s agricultural insurance sector offers attractive growth prospects along with the prospect of adding real impact value across underserved communities. Lastly, with our increased activities in the agriculture sector, we contribute to supporting recent policy initiatives to transform Nigeria’s economy and diversify it away from the oil sector.
REGIC was the first private insurer in Nigeria to receive regulatory approval for distribution of weather index insurance products, specifically targeting small scale farmers. How does weather index insurance work?
Benjamin: Weather Index Insurance (WII) is a non-indemnity based product, which does not include physical inspection of farms as traditional insurance cover demands. In that sense, it is a much more efficient product to underwrite and distribute, and the claims process as well is far more streamlined than with a more conventional agricultural insurance product. Our WII product provides protection to farmers against production losses or crop shortfall occurring at the crop germination, flowering and maturity phases.
For the crop germination and maturity phases, claim payouts are based on values obtained from pre-determined weather (rainfall/temperature/natural disaster) triggers and parameters as laid out in our insurance policy. Claim payouts are also made to the farmer at any of the crop growth stages once the set-out weather triggers are breached due to adverse climate changes in the farming location.
We additionally offer other variants of weather index products to further enhance our service proposition to our small holder farmers. These include Area-Yield Index Insurance (AYII), Normalized Difference Vegetation Index Insurance (NDVI) and Hybrid Index Insurance which combines features of different products.
What is the benefit of your products for smallholder farmers in Nigeria?
Benjamin: As noted, we provide economic protection, now largely unavailable, for the adverse effects of climate change and weather conditions. Having the right coverage could mean the difference between financial ruin and the ability to continue planting in the next, hopefully better, season.
Our agricultural insurance also plays a role in de-risking agribusinesses, making them more attractive for formal financial service players and investors such as micro and commercial banks, social impact investment firms or private equity firms.
What is your biggest USP that diﬀerentiates REGIC from competitors?
Benjamin: Our primary differentiating factor is our workforce. We invest in our people and have committed significant resources towards training our staff to deliver best-in-type products and exceptional customer-experience to our clientele.
We also understand that the best people should have the best tools, so we have invested heavily in ag-tech digital resources to connect virtually with our agricultural small-holder farmers and to provide business intelligence and agribusiness risk portfolio management capabilities to our business partners – all with the purpose of growing a robust agribusiness finance and insurance inclusive ecosystem.
How are BlueOrchard and the InsuResilience Investment Fund helping your growth?
Benjamin: Our goal is to insure over one million small-holder farmers by the year 2025, fostering insurance inclusion and financial empowerment to support this vulnerable segment of the population. BlueOrchard’s and the InsuResilience Investment Fund’s (IIF) global network of relationships with development institutions, technical experts and key players in the insurance and agricultural sectors will be of great support in achieving this goal. Furthermore, BlueOrchard and IIF will bring value through the Fund’s technical assistance and premium support facility which we believe will help us in meeting our financial inclusion targets by enabling us to develop new products and create alternative channels of distribution to reach our current clients and reach people who have traditionally been excluded from the insurance market.
What are your next milestones in terms of growth? And what is your vision for the company for the next years in terms of size and impact?
Benjamin: Nigeria has a 200 million strong, young population that needs to be insured and needs to better understand the role of the insurance marketplace in the economy. Of that huge population of young Nigerians, 60% are active in the agricultural space. Our long term growth strategy is to service this client segment and to grow our company by empowering their success.
Thank you, Benjamin, for answering our questions