Challenges facing the performance of agriculture insurance in Kenya
Agricultural Insurance aims at protecting the agriculturist against financial losses due to uncertainties that may cause agricultural losses arising from named or unforeseen perils beyond farmer's control. This study was set to determine the challenges facing the performance of agriculture insurance in Kenya. The study was conducted on the insurance companies dealing with general insurance. Data was collected using questionnaires which were hand delivered to insurance companies targeting underwriting managers in self addressed envelopes. Some questionnaires were emailed to the specific managers in the different companies to the convenient of the respondents. The results were analysed using descriptive cross sectional design as well as co-relational research due to the qualitative nature of the data. The key findings from the study shows that agriculture risks are systemic in nature and therefore affect a large number of farmers in the same geographical area therefore posing a major challenge to local insurance companies since such risks can seriously affect the financial solvency of a company. Adverse Selection and Moral Hazard is another major challenge facing agriculture insurance. The existence of government emergency aid in case of crop failures pose as financial solution to farmers therefore denying them to the need to take agriculture insurance. Other findings from the study were limited access to international reinsurance markets therefore denying the local companies the capacity to underwrite agriculture insurance. Poor agricultural risk infrastructure results in poor pricing of agriculture and lack of historical data necessary to undertake proper underwriting of agriculture risks, low risk awareness and lack of insurance culture amount to some of the major challenges facing this class of insurance. The findings of this study are important because they will assist in developing policies that will ensure that agriculture insurance is embraced in Kenya. This include introducing favorable strategies that will result in increased adoption of agriculture insurance therefore protecting the numerous, vulnerable, small and marginal farmers from hardships therefore bringing in stability in the farm incomes and increase in farms production.