This month, the first ever specialized agricultural insurance on the Ghanaian market is expected to be unveiled. Known as Drought Index Insurance, it will provide insurance for maize products against the ill-effects of unfavourable weather and will be available to farmers across the three northern regions ? Northern, Upper East and Upper West.
The innovative product will serve as a major step towards ameliorating risk in the country?s very important agricultural sector, which has found it hard to attract financing because of the high level of risk attributed to extreme weather conditions.
The impending launch of the product was revealed last week in Accra by Dr. Ken Appenteng of GTZ, the German international cooperation and development assistance agency, which is one of the three institutions promoting the product.
The others are the National Insurance Commission (NIC) and the Ghana Insurers Association, (GIA). The product was designed between November 2010 and April 2011.
Insurance for the First Drought Index is to be provided by the Ghana Co-Insurance Pool, an agricultural insurance system, put together by a consortium of general insurance firms.
The product will provide insurance for financiers of maize production, providing cover initially for Agricultural Development Bank, Stanbic Bank, three rural banks based in northern Ghana and a Tamale-based non-governmental organization.
Ghana Re and Swiss Re will serve as re-insurers and the premium rates are currently being negotiated with the latter, although it has already been determined that there will be no premium subsidies.
The product is the first to be engineered under the Ghana Agricultural Insurance Programme, promoted by GTZ, NIC and the GIA, and deploying a public ? private partnership approach.
The programme?s overall objective is to assist the insurance sector in Ghana to develop a sustainable agricultural insurance system and to introduce innovative and demand-oriented crop insurance products to protect farmers against financial risks caused by extreme weather events and other forms of climate change.
The programme?s timeline spans December 2009 to June 2013 and is being funded by the German Federal Ministry of the Environment, Nature Consortium and Nuclear Safety.
It is being managed by a Steering Committee, comprising 11 members drawn from both the public and private sectors, and a Technical Management Unit, supported by a Technical Committee on Agricultural Insurance.
Agricultural insurance is a risk management tool that helps to mitigate against major climate induced crop production and income losses for farmers, but so far has not been used in Ghana.
It comes in the form of specially designed weather perils for certain types of crops and animals.