Insurer, UAP Old Mutual has paid out Sh79.5 million to 2,210 tobacco farmers across the country covered under its crop insurance scheme.
The payment covers last season’s crop which was affected by floods, fire and drought.
The beneficiaries are farmers in Western, Nyanza and Eastern Kenya contracted by cigarette manufacturer British American Tobacco Kenya.
The insurer said the payment is one of the largest since it unveiled crop insurance scheme in 2007.
“Weather index insurance is based on historical rainfall data in given areas to aid assessment of insurance payout based on drought / excessive rainfall that in turn affects average crop yield,” UAP Old Mutual group managing director, general insurance James Wambugu said in a statement.
From 2014, UAP Old Mutual extended Kilimo Salama Insurance to area yield basis.
Farmers who take up this insurance receive a payout in case the actual average yield in an area is below a set threshold.
In 2015 the Government of Kenya piloted agriculture insurance by specifically focusing on livestock insurance in select counties.
The scope has since been expanded to include crop insurance. The Government-backed project is based on Area Yield which entails a comparison between historical average yield and actual yields, to determine the shortfall against the average yield and thus determine payout levels to farmers.
UAP Old Mutual also offers an agriculture based policy called replanting guarantee.
The insurer said it has expanded agriculture insurance from Kenya to Tanzania and Rwanda.