High premium rate and weak policies make livestock insurance unpopular
According to the Bangladesh Bureau of Statistics, from 1986 to 2007, 1.1 million head of cattle died due to floods and 3.2 million died due to cyclones in the country.
Livestock insurance in the country has not gained popularity among farmers due to high premium rates, low livestock mortality rate and policy weaknesses.
According to those concerned, several public and private companies have launched insurance schemes for livestock, focusing on the impact of climate change and animal diseases with increasing investment in this sector.
However, insurance companies are now struggling to find customers because farmers are not sufficiently aware of livestock insurance, they said.
In 1981, Sadharan Bima Corporation, the state insurance company, started a livestock insurance program. However, he discontinued service 27 years later.
Currently, Phoenix Insurance Company Ltd and Green Delta Insurance offer livestock insurance policies. But they too are disappointed with their business.
Bengal Meat, a meat processing company in the country, has 500 to 700 cattle to slaughter on its farm. It also has more than 1,000 contract farmers.
The company tried to purchase an insurance plan from Green Delta Insurance to protect the livestock of its contract farmers. But it was not successful due to the high cost. According to the company, it costs between Tk 3,000 and 4,000 to purchase a policy per pet, or $5-6 per pet worldwide.
Md Rezaul Karim Shameem, Senior Manager (Cash, Tax and Assets), Bengal Meat Limited, told The Business Standard: “We couldn’t buy a policy because of the high premium rate. It’s much more expensive here than in any other country in the world.”
According to the Department of Livestock Services (DLS), as the average farm animal mortality rate in the country is less than 2%, contractors are not interested in spending extra money on insurance. However, those who are interested lose their enthusiasm due to the high premium cost.
Syed Shahriar Ahsan, former managing director of Sadharan Bima Corporation, said herders are not interested in insurance because they don’t have a clear picture of it. “That’s why it wasn’t developed commercially,” he said.
Phoenix Insurance Company Ltd started selling livestock insurance policies in 2020. So far, it has only sold 802 policies, including 451 for cows and 351 for sheep. The company only paid Tk 1.75 lakh against two claims.
According to the company, entrepreneurs show more interest in taking out loan insurance policies rather than single insurance. It has signed agreements with Brac Bank and Bangladesh Finance Limited to sell policies against agricultural loans.
Md Jamirul Islam, Managing Director and CEO of Phoenix Insurance Company, said, “There is a lack of awareness among farmers about livestock insurance. It will take longer to be popular in Bangladesh.
Momtaz Begum and Rasel Sarkar, two livestock herders from Pabna and Gazipur, said they had recently purchased a livestock insurance policy on a trial basis for the safety of their animals.
According to sources, the DLS and the Financial Institutions Division have formulated a policy under the Ministry of Fisheries and Livestock, which includes a livestock insurance module. There will be a database in the module with information on animal mortality by region, epidemics and animal recognition.
Private insurance companies will have access to the module database to develop their plans.
Dr Md Golam Rabbani, Chief Technical Coordinator, Project Management Unit, Livestock and Dairy Development Project (LDDP), said “The module database will facilitate product development “.
Data from the Bangladesh Bureau of Statistics shows that between 1986 and 2007, 1.1 million head of cattle died due to floods and 3.2 million due to cyclones in the country.