Abuja - Disaster risk reduction experts welcome a scheme proposed by Nigeria’s National Emergency Management Agency (NEMA) to extend insurance to vendors who lose their assets in floods and fires in the country’s north-central Kaduna state, but said such initiatives need to be accessible to low-income Nigerians.
NEMA helped set up the scheme - the first of its kind in West Africa - out of frustration at the limitations of short-term government aid for people whose livelihoods were destroyed by fires or floods, said NEMA director-general Mohammed Audu-Bida.
“The whole idea is to help Nigerians bounce back and help them over the long run after a disaster occurs that disrupts their lives or livelihoods,” Audu-Bida told IRIN.
NEMA, Nigeria-based Nicon Insurance, the Kaduna State Market Development and Management Company and the Sheik Abubakar Gumi Market Central Union have collaborated on the plan, which has been up and running for one month.
Insurance currently covers only 3 percent of disaster losses in developing countries versus 40 percent in industrialized countries, according to Geneva-based UN Development Programme policy head Olav Kjorven in a June 2009 statement.
In NEMA’s scheme, the proposed cost is 1 percent of the value of the assets covered, which is lower than most private insurance rates in Nigeria, said Audu-Bida.
Nevertheless the plan is out of reach for Nigeria’s 81 million people who live on less than US$1 a day, said NEMA spokesperson Yushau Shuaib.
The majority of people living in poverty cannot access insurance, said UNDP’s Kjorven . “The world’s poor have been completely left out of [insurance], even though they are the most…in need of protection.”
Unable to access insurance, vulnerable groups turn to micro-finance, micro-credit and micro-savings as buffers against shocks and disasters, said Alex Rees, Deputy Head of Hunger Reduction at Save the Children.
To extend disaster insurance to the poor, insurers need good data to accurately price risks; a functioning, independent judicial system to ensure pay-outs come through, and they must make their schemes affordable and known, according to the UN International Strategy for Disaster Reduction (UNISDR).
A market-vendor in neighbourring Kano state, who asked to remain anonymous, told IRIN: “Disaster insurance sounds like a good idea, but how do we guarantee the companies would pay? You never know here [in Nigeria].”
Rees told IRIN that insurers also need to develop a better understanding of the livelihoods of the poorest groups and how disasters affect them to make sure they get pay-out triggers such as food price rises, or below-average rainfall, right.
For NEMA’s Shuaib, helping poor people recover their assets in a disaster is important, but responsibility extends beyond NEMA. “It could be a good idea to have an insurance scheme for the poorest, but that could come under a national security programme for [the vulnerable] that may include the old and weak,” he told IRIN.
NEMA is now pushing for the insurance scheme to be rolled out beyond Kaduna state and is negotiating with insurers and farmers’ unions to reach more small-holder farmers.