NAICOM, Agriculture Ministry Launch Major Farm Insurance Reform

News in Brief:

-The FG is restructuring Nigeria’s agricultural insurance system to expand coverage, strengthen NAIC, and scale protection to 3.6 million farmers by 2026.

-By integrating insurance into programmes like NAGS-AP and introducing data-driven index products, it plans to improve access to finance and boost productivity.

The Federal Government has launched a major reform of Nigeria’s agricultural insurance system, a move expected to significantly impact farmers facing rising climate and disaster risks.

The overhaul follows a strategic partnership between the National Insurance Commission (NAICOM) and the Federal Ministry of Agriculture and Food Security. It focuses on the Nigerian Insurance Industry Reform Act 2025 (NIIRA 2025), which regulators say will modernise the insurance sector and reposition agricultural insurance as a core pillar of food security.

Restructuring NAIC, Expanding Farmer Coverage

Under the new framework, the Nigerian Agricultural Insurance Corporation (NAIC), currently the country’s sole specialised agricultural insurer, will be restructured and strengthened to expand coverage across the agricultural value chain, from crop and livestock farmers to processors and aggregators.

For Nigerian farmers, the timing is critical. According to the 2024 Annual Flood Outlook, 148 Local Government Areas in 31 states are classified as high flood-risk zones, while 249 LGAs fall under moderate risk. With over half of Nigeria’s farming areas exposed to flooding, drought, pests and disease outbreaks, insurance is increasingly seen as essential rather than optional.

NAICOM Commissioner for Insurance, Olusegun Omosehin, disclosed that over 1.47 million smallholder farmers are now insured nationwide, following the addition of 250,000 farmers in the second quarter of 2025 alone. The commission aims to scale this number to 3.6 million farmers by 2026.

Evidence from insured farmers is already emerging. In North Central Nigeria, insured rice farmers reportedly achieved 11 per cent higher yields, averaging 20 bags per hectare compared to 18 for uninsured counterparts. In Kaduna, ginger farmers who lost more than 90 per cent of their crops to disease outbreaks received payouts that enabled them to return to production without exhausting personal savings.

Data-Driven Insurance and NAGS-AP Integration

A key innovation under the reform is the promotion of index and parametric insurance products. Through the ministry’s new Federal Department of Agricultural Data Analytics, rainfall, yield and climate data will be used to trigger faster, more transparent payouts, reducing delays often associated with traditional claims processes.

The government also announced plans to integrate insurance into the $134 million National Agricultural Growth Scheme and Agro-Pocket (NAGS-AP) programme, financed with support from the African Development Bank. The scheme targets five million farmers and will now include insurance protection to safeguard input investments against floods, droughts, pests and diseases.

For farmers, stronger insurance coverage could mean easier access to loans, reduced production risk, and greater confidence to invest in improved seeds, fertiliser and climate-smart practices. Officials say if fully implemented, the reform could transform agricultural insurance from a marginal safety net into a central tool for resilience, productivity and long-term food security in Nigeria.