Weak business models stall agricultural insurance: experts

The key challenge facing agricultural insurance in Bangladesh is not a lack of demand, but the absence of viable business models and risk-sharing mechanisms needed to scale the sector, experts said yesterday.

There are large agricultural finance, value chain and public programme networks that could support insurance at scale, they noted at an event organised by the United Nations Development Programme (UNDP) Bangladesh’s Insurance and Risk Finance Facility at Pan Pacific Sonargaon in Dhaka.

However, they said the sector remains largely disconnected from these systems.

Enock Sing’oei, agricultural insurance specialist at UNDP Bangladesh, said climate-related disasters have cost the global agricultural sector approximately $3.8 trillion over the past 30 years, yet 80 percent of smallholder farmers still lack access to formal insurance. In Bangladesh, agricultural insurance penetration stands at around 0.5 percent.

Food production is a collective national responsibility shared by the government, private sector and individuals, he said, adding that food loss contributes to malnutrition, social instability and broader economic harm.

The specialist called for building a well-functioning agricultural insurance market through institutionalisation and ecosystem development.

Monirul Hoque, national programme officer at UNDP Bangladesh, said agriculture contributes approximately 11.6 percent of GDP and supports a significant share of the labour force.

Disaster-related risks to agricultural production have increased substantially over the past 10 to 15 years, he said, adding that UNDP is supporting the development of a micro-insurance regulatory framework and piloting a model that integrates insurance into government systems.

The model, titled “Theory of Change”, draws on global experience, where successful agricultural insurance initiatives are often government-led, he informed.

The programme is designed to support both government institutions and private-sector actors in understanding key performance indicators, implementation modalities, and operational requirements, he said.

Sector-specific risks featured prominently in the discussion. Muhammad Tanvir Hossain Chowdhury, deputy director for the blue economy at the Department of Fisheries, said a single flood or disease outbreak can destroy fish stocks and wipe out an entire production cycle’s income, while cyclones add further uncertainty for coastal farmers.

Farmers often respond by borrowing, reducing investment or relying on informal support — coping mechanisms rarely sufficient to restore production quickly, he said.

Mohammad Bozlur Rahman, director for planning at the Department of Livestock Services, said livestock farmers losing animals to disease or climate events lose not just their stock but their financial stability entirely.

Md Mijanur Rahman, director for rating, audit and survey at the Insurance Development and Regulatory Authority (IDRA), said claims assessment speed is critical.

If farmers do not understand the product or experience delays in receiving payouts, confidence in the entire market will be undermined, he said.

Parimal Sarker, joint secretary at the Local Government Division, emphasised the need to create conditions where insurers and farmers can find mutually beneficial opportunities. The government’s role is to facilitate this through sound policies and enabling regulations, he said.

Sarder M Asaduzzaman, assistant resident representative at the UNDP, said Bangladesh is a pioneer in innovation, climate adaptation, and the development of tested and proven climate adaptation solutions.

Agricultural insurance is one important solution in this regard, he added.