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By Henry Uche
For millions of Nigerian farmers, insurance is the thin line between a bad season and financial ruin. A flood can erase a year’s harvest overnight; disease can wipe out livestock; drought can turn costly inputs into unrecoverable losses.
That makes the fate of the Nigerian Agricultural Insurance Corporation (NAIC) more than an insurance-sector story.
The government-owned corporation, established specifically to protect farmers from agricultural risks, has failed to meet the latest recapitalisation requirements for insurance companies, raising questions about its financial capacity, future structure and ability to protect farmers at a time when climate and production risks are intensifying.
The numbers underline NAIC’s importance. In the five years to June 2024, the corporation said it provided N1.014 trillion in insurance coverage to agricultural projects and covered about 1.25 million farmers. It generated approximately N8.56 billion in premiums, incurred N3.88 billion in claims and had paid N3.08 billion by the time of the report.
Its outreach extended to more than 516,000 farming communities, while about 129,000 agricultural value-chain actors received training.
Yet, NAIC was missing from the list of insurers that completed the latest recapitalisation exercise.
Nigeria now has 48 insurance companies and two reinsurance companies with new licences to operate in the life, general, composite and reinsurance segments. Several other insurers also failed to meet the new requirements.
For NAIC, however, the consequences could be different.
Rather than disappear, the corporation is expected to retreat to the agricultural insurance mandate for which it was created, after years of also underwriting general insurance business.
A corporation at a crossroads
NAIC began as a scheme in 1987, was incorporated in 1988 and became a full federal corporation under Act 37 of 1993.
Its mandate was clear, which is to protect farmers against losses from disasters, pests, diseases and fire; encourage banks to lend to agriculture; and give farmers the confidence to invest without facing total ruin from a single catastrophe.
Its products include subsidised crop and livestock insurance, with government able to subsidise up to 50 per cent of premiums for eligible farmers, as well as commercial cover for large-scale crop producers, livestock operators, poultry businesses and fisheries.
But sources familiar with the corporation’s operations said NAIC, with regulatory approval, expanded into general insurance, bringing it under the supervision of the National Insurance Commission (NAICOM). The failure to recapitalise has now forced a reckoning.
“NAIC was set up by law to do agricultural insurance for government schemes, then along the line they started doing general business,” one source said.
He added: “Now they are unable to recapitalise. The law says they must still be in existence, so they’re going back to the agricultural scheme they were actually set for.
“Since they can no longer underwrite general business which involves Risk-Based Capital (RBC), they have to fall back to their core purpose of establishing them.”
That leaves an uncomfortable question: why did a federal government-owned institution fail to raise the capital required to remain in the broader insurance business?
Stakeholders point to years of uncertainty over government funding, ownership and the corporation’s commercial direction.
An insurance enthusiast and former veteran editor, who spoke anonymously, said the Federal Government at one point neither adequately funded NAIC nor pursued its privatisation.
That, the source argued, left the corporation trapped between being a government institution and operating in a competitive commercial insurance market.
“Because they are a federal government agency, they cannot source funds from the private sector. If they do, it means they want to privatise, and they are not ready to privatise.
“So, they better go back to where they are coming from and deliver on mandate. Nigerian farmers need more insurance cover now than ever”, the source said.
The food-security question
According to experts, that last point is perhaps the most important.
Nigeria’s farmers are already operating under mounting risks from floods, drought, pests, diseases and other climate-related shocks. When those risks are uninsured, the damage does not stop at the farm gate.
A farmer who loses a crop may plant less the following season. A livestock farmer who loses animals may lack the capital to restock. A heavily affected producer may abandon farming altogether.
The cumulative effect is lower output, tighter food supply and higher prices.
Food-security professional Abiodun Olowu said inadequate agricultural insurance could also discourage farmers from investing in machinery, improved seeds, irrigation and other productivity-enhancing inputs.
“The lack of adequate agricultural insurance also threatens food security and can drive up food prices,” Olowu said.
“When farmers suffer uninsured losses, they may reduce the scale of their operations or abandon farming altogether, resulting in lower agricultural output and shortages of essential food commodities.”
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He added that insurance also matters to lenders because farmers with no protection represent a higher credit risk.
“It is not even ideal for the government to shoulder the burden of post-disaster relief; instead, they should strengthen its own NAIC.
“Stronger agricultural insurance coverage is not merely a protection mechanism for farmers; it is an important tool for safeguarding food security, rural livelihoods, investment and national economic stability”, he said.
Opportunity in the crisis
NAIC’s setback could, paradoxically, create room for a broader agricultural insurance market.
With recapitalised insurers now operating with stronger capital bases, more companies could enter a market that NAIC historically dominated.
That could bring competition, new products and wider coverage for farmers, provided insurers see agriculture as a viable commercial opportunity.
But experts caution that insurance cannot replace security.
Farmers operating in areas affected by banditry, terrorism and communal violence need protection for their lives and property before insurance can fully address production risks.
For former Chairman of the Nigerian Insurers Association, Gus Wiggle, NAIC still has a role to play.
He said the corporation should concentrate on agricultural insurance and, most importantly, ensure that competent professionals run it.
“If they have the competent hands, I don’t see any reason they should not do better.
“Let the right people be at the right places, and as long as they don’t run it as a government agency. With the best hands, they can do better”, Wiggle said.
But he was less sympathetic to insurers that failed to meet the new capital requirements, arguing that the tougher regime reflects the increasing demands of the insurance business.
He also reminded insurers of NAICOM’s mantra: “Find a reason to pay genuine claims.”
For farmers, that principle is crucial. Insurance has little value if compensation arrives too late to allow a farmer to return to production.
New role for NAIC
The Federal Government and NAICOM appear to recognise that NAIC cannot simply be left in limbo.
The two bodies, alongside the Federal Ministry of Agriculture, have moved towards restructuring agricultural insurance and strengthening NAIC’s role under the new insurance architecture established by the Nigerian Insurance Industry Reform Act (NIIRA) 2025.
The objective is to expand agricultural insurance, reduce farmers’ exposure to climate shocks, attract investment and strengthen the resilience of the food system. That could give NAIC a clearer purpose: not competing with commercial insurers across the general insurance market, but functioning as a specialised vehicle for agricultural risk protection, particularly for smallholder farmers who may be priced out of conventional insurance. But restructuring alone will not solve the problem.
The corporation will need adequate funding, professional management, stronger governance and operational discipline if it is to regain confidence.
As the broader insurance industry enters a new era of risk-based supervision, NAIC’s challenge is to prove that returning to its original mandate is not a retreat, but a chance to rebuild around the job Nigeria needs it to do most.
The real test
The recapitalisation exercise may be over, but its consequences are only beginning to unfold.
Insurance advocates say the success of the reforms should ultimately be measured not by the amount of capital raised or the number of companies that survived the exercise, but by whether Nigerians receive better protection.
Insurance consumer, Arinze Chibueze, said the industry now faces the harder task of translating regulatory reforms into real benefits for policyholders.
“The exercise has officially ended, but the real work has only just begun,” he said.
For NAIC, that work is particularly urgent.
The corporation has already demonstrated that there is enormous demand for agricultural insurance. The question now is whether it can turn its capital crisis into a reset, one that places farmers, claims payment and food security back at the centre of its mission.
Because when the next flood comes, the farmer will not care whether NAIC met a regulatory capital threshold.
The farmer will want to know who will help him plant again.
