High premium rate, policy weakness make livestock insurance unpopular

As per Bangladesh Bureau of Statistics, from 1986 to 2007, 1.1 million livestock died due to floods and 3.2 million died due to cyclones in the country

Livestock insurance in the country has not achieved popularity among farmers due to high premium rates, low mortality rate of livestock and weaknesses in policy.

According to people concerned, several government and private companies initiated insurance schemes for livestock, focusing on the impact of climate change and animal diseases with the rise of investment in this sector.

However, the insurance companies are now struggling to find customers as there is a lack of awareness among farmers about livestock insurance, they said.

In 1981, Sadharan Bima Corporation, the state-owned insurance company, started a livestock insurance scheme. However, it stopped the service 27 years later.

Currently, Phoenix Insurance Company Ltd and Green Delta Insurance are offering policies for livestock insurance. But they too are disappointed with their business.

Bengal Meat, a meat processing company in the country, has 500-700 cattle for slaughtering in its farm. It also has more than 1,000 contract farmers.

The company tried to buy an insurance scheme from Green Delta Insurance for the protection of the livestock of its contract farmers. But it did not succeed due to high cost. According to the company, it takes Tk3,000 to Tk4,000 to purchase a policy per animal, which is $5 to $6 per animal worldwide.

Md Rezaul Karim Shameem, senior manager (treasury, tax & assets), Bengal Meat Limited, told The Business Standard, "We could not buy a policy because of the high premium rate. It is much costlier here than in any other country in the world."

According to the Department of Livestock Services (DLS), as the average mortality rate of farm animals in the country is less than 2%, entrepreneurs 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 that livestock farmers are not interested in insurance as they do not have a proper idea about it. "That is why it has not been developed commercially," he said.

Phoenix Insurance Company Ltd started selling livestock insurance policies in 2020. So far, it has sold only 802 policies, including 451 for cows and 351 for sheep. The company has paid only Tk1.75 lakh against two claims.

As per the company, entrepreneurs showing more interest in taking insurance policies on loans rather than single insurance. It has signed deals with Brac Bank and Bangladesh Finance Limited to sell policies against farm loans.

Md Jamirul Islam, managing director & CEO, Phoenix Insurance Company, said, "There is a lack of awareness among farmers about livestock insurance. It will take more time to be popular in Bangladesh."

Momtaz Begum and Rasel Sarkar, two cattle farmers from Pabna and Gazipur, said that they recently bought a livestock insurance policy experimentally for the security 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. The policy is being finalised by the Livestock and Dairy Development Project (LDDP). There will be a database in the module with information on region-wise animal mortality, disease outbreak and animal recognition. The project will also create a database of 50,000 cows. 

Private insurance companies will be given access to the database of the module to develop their schemes.

Dr Md Golam Rabbani, chief technical coordinator of Project Management Unit, Livestock and Dairy Development Project (LDDP), said "The database of the module will make product development easier. Besides, the product should be affordable to the farmers. Otherwise, it won't work."

Fisheries and Livestock Minister SM Rezaul Karim said, "We should identify the formulation process, and its pros and cons of livestock insurance guidelines. The policy is being formulated under LDDP project of DLS." 

Data from the Bangladesh Bureau of Statistics show that from 1986 to 2007, 1.1 million livestock died due to floods and 3.2 million due to cyclones in the country.