The World Bank Group, the BBVA Microfinance Foundation and Bancamía organized a workshop on rural microinsurance for the agriculture and livestock sector

The areas of greatest poverty in Colombia are concentrated in the rural parts of the country. The workshop on rural microcredits for the agriculture and livestock sector held on 5 November and featuring experts from the World Bank, Bancamía and the BBVA Microfinance Foundation, aimed to lay the foundations for an innovative insurance product tailored to poor and vulnerable agriculture and livestock farmers in the rural sector, and to generate actions to design a system capable of bringing change to rural areas of Colombia.

According to Margarita Correa Henao, executive vice-president of Bancamía, recent data from the National Farming and Livestock Census in Colombia indicate that 69.9% of Agriculture and Livestock Production Units have an area of less than 5 hectares, comprising only 5% of the area in the census, whereas units of more than 500 hectares are in the hands of 0.4% of owners, and represent 41.1% of the 113 million hectares in the census. Data from the National Administrative Department of Statistics show a greater incidence of poverty in rural than in urban areas. 40.1% of the rural population lives in a condition of vulnerability, and 17.6% in a condition of extreme poverty. This poses a significant challenge from the aspect of insurance to protect people who need it most. However, the current offer of insurance is insufficient and inadequate for the agriculture and livestock sector, which requires products that are more geared to small family-run farming units.

The institutions behind the workshop and the public sector organizations and private bodies in attendance shared their knowledge of the situation of farming insurance in Colombia and the role of insurance companies, the financial sector and the government. The authorities taking part in the workshop included the Financial Superintendent, leading insurance agents, representatives of reinsurance companies, international experts, and representatives of the national government. The workshop also looked at international cases for the design, operation and results of products for insuring agricultural and lives activities.

Summing up the event, Claudio González Vega, chairman of the Foundation, said that “poverty can only be defeated with an increase in productivity, which is the result of investment and innovation. However they are under threat from nature, the market and the political environment. Although insurance is not a panacea, it is an essential supplement to the features of deposit, credit and other financial tools for the overall management and mitigation of risks. The banks in the BBVA Microfinance Foundation Group offer a wide range of services to poor and vulnerable rural producers, and build alliances with other important actors in the sector to support this segment of the rural population in rising out of poverty”.

The workshop continues the work begun in the first Forum for Rural Development organized by Bancamía in September 2014 in Bogota. The new meeting was conceived as a forum where experts in the field could share their knowledge, while international guests described their experiences in building insurance products to be able to overcome uncertainty and reduce the risk of falling deeper into poverty. Micro-insurance policies are a tool for sustainability, security and support for the rural population.