LIVESTOCK INSURANCE

Livestock sector has assuned an increasingly critical role in the rural economy of Pakistan as 30-35 million rural population is engaged in raising livestock for their livelihood. With the population growing at the rate of foce persons per minute, increasing dietary awareness and rising standard of living, demand for Livestock products in the country is rapidly increasing. Consequently, this sector has the potential of rapid growth and fast economic returns. Hence, it can also serve as an effective tool for government poverty reduction program in the rural areas. In fact, realizing this potential, government is now talking keen interest and giving priority to the development of this sector However, there are a wide variety of risks associated with the health and well being of animals and their productivity, which can result in significant financial losses to the livestock owners. Livestock insurance provides financial protection to Livestock owners against risks of these losses. Investment in animal often constitutes a large part of the farmers total capital. This investment therefore needs to be protected. Moreover, procurement of animals is often financed through credit. Insurance as a security for credit, improves the credit worthiness of farmers. Lending institutions feel comfortable when credit given to farmers for the purchase of livestock is insured, as it serves as a supplementary security. East West Insurance (EWI) has been involved with Livestock insurance right from the beginning and is one of the leading insurers with good experience in this field. The company provides comprehensive all risks insurance cover for individual animals as well as herds against death due to disease of accident including fire, lightening and snakebite as well as against risks of calving. Thus the insurance cover protects the interest of the borrowers as well as the Bank advancing loans for the purchase of livestock.
During the year 2004, a gross premium income of Rupees 2.85 million was generated on this account, which has now increased to rupees 11.94 million during the year 2007. Because of the government interest and emphasis in the expension of this industry as reflected in the liberal credit policies and easy loaning to livestock owners by the banks, we foresee a rapid and sustantial inscrease in volume of business under this head in the coming years.