Farmers are set to benefit from a government-backed insurance plan with seven underwriters offering a cover against poor yields.
The product will see the government pay 50 per cent of the premiums and will be underwritten by APA, Amaco, CIC, Heritage, Jubilee, Kenya Orient and UAP.
Farmers who lose more than 20 per cent of their produce as a result of adverse climatic conditions, disease or damage by insects can benefit from the schemes.
“Smallholder farmers are the backbone of our agricultural production. However, in recent years, they have had to bear huge risk that comes with effects of climate change,” said APA Group chief executive Ashok Shah.
APA first offered a weather-index cover in 2010, piloting the product on maize, coffee and wheat farmers in Embu, Meru and Narok respectively. UAP has also been involved in insuring small-scale farmers.
Last year, micro-insurance firm Acre Africa announced it would partner with insurance companies and banks to design products for small-scale farmers who are usually regarded as too risky to insure in Kenya.
The new move with an expanded group of companies and State backing may finally provide comfort for the high risk product.
Mr Shah said the insurance companies were hoping to help soften the risk of unpredictable weather and natural disasters that lead to huge crop losses in the country’s bread basket.
The Area Yield Index Insurance is currently being tested in Nakuru, Embu and Bungoma counties and will be rolled out to the rest of the counties as the seasons progress.
It will cover farmers based on the condition of harvest history of the unit area of insurance where the farm falls.
For the long rains season, farmers have up to March 14 to sign up for the cover, and up to the second week of October for the short rains period.