International experience developing agricultural insurance

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					International experience developing agricultural insurance
?Agricultural insurance is for agricultural producers engaged in planting and breeding
production process, on the victims of natural disasters and accidents, the economic
losses caused by a kind of insurance to provide protection. In the current context of
economic globalization, the development of agricultural insurance can not only
dispersed nature of agricultural production risk, the implementation of agricultural
production, economic compensation before and after childbirth, stable income of
peasants, but also improve the credit level of the main agricultural operations, and
promote rural finance system stability, increase agricultural production and
management standards and international competitiveness. Development of
agricultural insurance is a systematic project, involving legislation, financial subsidies,
tax benefits, reinsurance arrangements, catastrophe risk fund, credit support and
organizational structure and other aspects, which is quasi-public agricultural insurance
products by the special nature of the decision . Around these issues, I mainly talk
about the current development of agricultural insurance Understanding.
Increasing the financial subsidies, and promote sustainable development of
agricultural insurance
From the international point of view, all agricultural insurance Gaode better country,
the government have given a wide range of support, such as the implementation of tax
policy, to give a certain percentage of premium subsidies, the Government has come
forward to the development and implementation of agricultural insurance scheme. In
contrast, subsidies of agricultural insurance in China is obviously insufficient, which
is constraining the development of agricultural insurance, the main reason. Because in
the economically underdeveloped areas, most farmers in the net of various living
expenses, children's education expenses, buying necessities such as
pesticide and fertilizer fees, very little disposable income. If the remaining income for
most farmers to buy rates as high as 6% to 10% of the agricultural insurance products,
is almost impossible. Our limited financial resources, financial subsidies should
adhere to basic principles of protection, insurance, first select the people's
livelihood, the subject of planting, and mainly the implementation of premium
subsidies could be considered first on rice, wheat, corn, soybean and cotton crops to
provide premium five subsidies, premium subsidy standards generally 30% to 50%.
The amount of agricultural insurance to protect farmers should be to maintain the
basic re-productive as the starting point, the insurance amount is based on direct
physical and chemical costs, the premium rate is determined on the basis of the
average loss rate. Moreover, given the decentralized nature of agricultural production,
the complexity of exploration risk, high cost of agricultural insurance company, China
should also learn from international experience, according to the size premium of 5%
to 7% on operating agricultural insurance business insurance companies management
fee subsidies.
Some people say that agricultural insurance is a bottomless pit, unable to fill. Is that
true? Here we have the size of financial subsidies to agricultural insurance to be a
general estimate.
The first step, we estimate the direct materialization cost of five major crops based on
the amount of insurance. According to the National Bureau of Statistics survey
showed Rural Investigation Team, net of labor costs, the farmers grow food in 2004
put the average 201.5 yuan per mu.
The second step, according to the standard estimate of 2004 rice, wheat, corn,
soybean and cotton crops sown area of five, as 13.82337 million mu.
The third step, we estimate that the average loss rate of five crops. Heilongjiang Land
Reclamation for 10 years we have accumulated in rice, wheat, corn, soybean crops
risk loss of four kinds of data, setting a 10% error range, it can be inferred in general
the risk of loss of the national average rate of 11.898% ~ 14.542%.
The fourth step, the estimated premium rates for the five crops. Although based on the
determination of premium rates based on loss rate, but the loss of control and poor
agricultural insurance, moral hazard and adverse selection may occur, in order to
avoid these risks, in the development of the insurance provisions, to take absolute
deductible rate control, we deducted by the loss rate in excess of 30% to determine
premiums. So that we can measure the five major crops initial premium rate is
8.325% ~ 10.175%.
With these data, we can estimate the financial premium subsidy standards and scale.
Suppose that 70% of the national rice, wheat, corn, soybeans and cotton insured that
the insured rate was 70%, the proportion of financial subsidies comprehensive 50%,
the total fiscal subsidies size 81.16 ~ 9.92 billion yuan (example is shown below ).
201.5 (yuan / mu) × 13.82337 (mu) × (8.325% ~ 10.175%) × 70% × 50% = 81.16 ~
99.20 (million)
China's major crops on the scale premium subsidies for the initial estimates
can be seen, as long as the annual financial subsidy of 100 yuan, you can start the
main crop in the country's insurance, China already has the financial ability
to subsidize the insurance of crops.
Adhere to the voluntary insurance and compulsory insurance, and to improve
agricultural insurance insurance rates
Foreign proved simply raise premiums to subsidize agricultural insurance can not
effectively improve the enrollment rate, if fully implemented voluntary insurance,
agricultural insurance market, adverse selection problem will be very serious, not only
can not increase insurance rates, even at low participation insurance rates and the
vicious circle between high premiums, leading to shrinkage of agricultural insurance
market.
To address the conditions of voluntary insurance agricultural insurance insurance rates
low, many countries have adopted laws and regulations, will participate in agricultural
insurance and enjoy other preferential policies linked to agriculture, attracting a large
number of farmers to insure adequate. Japan in 1947, "Agricultural
Disaster Compensation Law", where the significance of the
people's livelihood of food crops, livestock and other statutory insurance
coverage for compulsory insurance. In 1994 the United States,
"Agriculture Insurance amendment" clearly defined, not
participate in the crop insurance scheme farmers can not get other government
benefits programs such as agricultural products (21.90,0.00,0.00%), loan schemes,
agricultural price subsidies and protection programs. France "Agricultural
Insurance Act," provides some related to the national economy and the
main crops (rice, wheat, barley, fruit trees, etc.) and the main domestic animals (cattle,
sheep, horses, pigs, silkworms, etc.) to implement mandatory insurance. Philippines,
Thailand, India and other countries are also those who are insured crop and planting
of this crop production loans for farmers to compulsory insurance.
In China, December 28, 2002 as amended "Agriculture Law"
46th article: the implementation of agricultural insurance, the principle of
voluntariness. No organization or individual may compel farmers and agricultural
production and operation organizations to participate in agricultural insurance.
Farmers with low income, low income from farming of agricultural production costs
are high, weakening the voluntary purchase of agricultural insurance, the economic
base, increase the development of agricultural insurance in China at this stage
difficult.
As the large regional differences in China, in enhancing agricultural insurance
mandatory practices abroad could not be copied, but can not engage in
"indiscriminate", sum up experience in practice should be based
on a gradual manner.
Catastrophe risk fund established to enhance agricultural insurance companies against
catastrophic risks
As the agricultural risk of high relevance, resulting in agricultural risk at the time and
space, not easy to spread, it is easy to form agricultural catastrophe losses, eating all
the agricultural insurance company reserves and capital, to restrict the sustainable
development. But to remove the agricultural catastrophe risk, not the insurance
company itself can solve agriculture and, therefore, need to establish under the central
government-led agricultural catastrophe risk fund, suffered catastrophic losses on
agricultural insurance companies to provide some degree of compensation, enhanced
resistance to giant disaster risks.
Catastrophic risk fund raising should be country-driven, local secondary, raising
channels should include: national financial allocations; from rural insurance company
no big disaster years of agricultural insurance premiums taken out part of the
accumulated savings; agricultural insurance company tax breaks part; from disaster
prevention, mitigation and disaster relief expenditures and the special subject of
agricultural insurance services to extract the corresponding part of the funds; every
year from its grain risk fund countries taking part, will integrate these resources to
enrich catastrophic risk fund. In addition, also by the policy insurance agencies in the
capital market catastrophe risk fund bonds issued to improve catastrophe risk fund
reserve capacity.
According to experience data, generally 10% of premium income more appropriate
provision for catastrophic risk fund. Nationally, only if catastrophic risk fund 60% of
financial support, 70% of the insured in case, you need to budget for each of 5 to 600
million yuan.
The use of catastrophic risk fund include: normal times, and catastrophic risk fund to
increase not only the use, once the major natural disasters occur, agricultural
insurance excess of loss catastrophe risk fund in part by the agricultural damages, it is
subject. In addition, agricultural catastrophe risk fund a small portion can be used for
other purposes, such as by building irrigation facilities to prevent floods and drought;
through vaccination in the prevention of livestock diseases; support of agricultural
research institutions in disaster occurrence, risk early warning system for the
establishment of agriculture to provide the scientific basis for such.
Jia Jiang catastrophic risk fund for the management, should establish a national
agricultural catastrophe in the central risk management agency funds various forms of
business insurance, the main Nong Ye, An Zhao Yuan Ze to the insurance agency
business Zai Gou Mai reinsurance, or in the event of catastrophe excess Peifu of cases,
excess of loss paid by the agency part of the risk of loss, dispersion management of
the main agricultural insurance risk.
The establishment of reinsurance mechanisms to spread the risk of agricultural
insurance business
As the agricultural insurance risk, regional strength, the event of disaster may be a
short time to several counties, or even the object of insurance in several provinces,
also causing enormous losses. This makes a lot of insurance companies can not set
targets to spread agricultural risks, insurance companies target the more risk the
higher the concentration, the greater the business risk insurers. Therefore, agricultural
insurance in developing countries in the world when they establish an effective
mechanism for risk diversification of agriculture, agricultural risk through reinsurance
or other forms of fund managers to spread the risk of agricultural insurance. At
present, agricultural insurance, reinsurance lack of appropriate policies, measures,
purchase of commercial re-insurance costs are too high, business re-insurance sector
on agricultural insurance, reinsurance issues with great care, agriculture reinsurance
difficult, are the experiments across the common issue . In this case, a re-insurance
mechanism, one need for the national financial investors to set up China's
agricultural re-insurance companies, and 以 the form of law provide for any form of
agricultural insurance, Bi Xu Re Fenbao to agriculture, Chao lost in part by the state
finance burden; Second, countries need to formulate preferential policies to support
the China Reinsurance Group Company for the various institutions engaged in
agricultural insurance, risk diversification, the policy points into the agricultural
insurance premiums, set up a special fund, the Fund accumulated surplus, the year of
catastrophe with a revolving fund for damages, the difference in part by government
subsidies; Third, all subjects have the insurance and international reinsurance
companies to explore co-operation, the risk of agriculture spread to a wider scope.
Development tax incentives, to expand the coverage of agricultural insurance
In China, the current tax regulations, agricultural insurance, exempt from business tax
and stamp duty. This is in a certain period to reduce disaster losses, reduce farmer
income volatility and promote the development of agricultural insurance has played a
positive role, but only the definition of agricultural insurance in the planting and
breeding. At present, China's agriculture is in the transformation of
traditional agriculture to modern agriculture, a critical period, agricultural insurance
should be fully involved in agricultural production, farmers living and rural markets,
whether farmers or their personal property, whether it is irrigation and water
conservancy facilities, or processing of agricultural products should have appropriate
insurance services, so for the Full Play to Agricultural insurance, financial
compensation, financing and social management capabilities, future, the government
should adjust the industrial structure and rural economic and social development
needs and formulate tax incentives and gradually expand the policy agricultural
insurance coverage. For example, exempt from both planting and breeding industry,
while business tax and stamp duty, income tax exemption from planting and breeding
of two industry; of other agriculture-related insurance, business tax by 5% front-end,
according to the return of 3%, stamp duty by 0.1% front-end, by 0.05% return, will
return taxes to enrich the risk fund.
Increase of agricultural insurance and credit support, promote financial deepening
Agricultural insurance and rural credit will be combined, is the United States and
France and other countries to carry out an important experience in agricultural
insurance. For China, the agricultural insurance better developed areas, agricultural
insurance, the insured can provide loan guarantees or insurance provided to
low-interest agricultural loans of financial institutions interest subsidy, when the
conditions are, you can participate insurance as a condition of loan; of operating
agricultural insurance companies with insufficient flow of funds, allowing it to apply
for a specified amount of interest-free or low-interest loans; encourage agriculture by
insurers of existing rural financial institutions sell insurance products.
Agricultural risk management institutions set up to co-ordinate the development of
National Agricultural Insurance
The complexity of agricultural insurance not only in its exhibition industry, insurance,
disaster prevention and impairment, claims and other business aspects, more
important is the agricultural insurance has a strong policy to require coordination
across sectors. For example, agricultural insurance, the need for adjustment of
agricultural structure and promote government services, this policy is formulated by
the Ministry of Agriculture and Development and Reform Commission; and subsidies
for premiums and investment management fees to the decision by the Ministry of
Finance. This requires the management of agricultural insurance agency and have a
good ability to communicate the relevant departments. With the expansion of the scale
of agricultural insurance, China should draw on the United States and other countries
of the Jing Yan, timely Kaolv the establishment of agricultural Fengxian
administration to form the National Agricultural Risk Authority or the Ministry of
Finance led by the State Council, Ministry of Agriculture, CIRC and Reform
Commission agricultural insurance and other departments together constitute the
Management Committee, co-ordinate the development of national agricultural
insurance. Its main functions are: co-insurance and commercial insurance companies
entered into reinsurance contracts to provide reinsurance; to purchase an insurance
policy the insured to pay premiums of agricultural subsidies, agricultural insurance
operators to pay management fee subsidies; promotion of existing agricultural
insurance, insurance, and to help develop new types of insurance; responsible for the
reasonableness of the premium rate comments; of the current shortcomings of
agricultural insurance system, and a revised proposal; in charge of agricultural
insurance operators over the re-insurance fund and the compensatory fund ; to a
serious loss of agricultural insurance operators to provide low-interest or interest-free
loans; crop insurance to carry out extensive promotional activities, risk management
education for farmers; and so on.
Promote Agricultural insurance legislation, strengthen the agricultural insurance
system
Agricultural insurance, dependence on the relevant law is quite strong, but China has
not been established agricultural insurance laws and regulations. The current
"Insurance Law" states: state supports the development of
agricultural services, insurance, utilities, agricultural insurance by law, administrative
rules and regulations separately. In practice, agricultural insurance in accordance with
the "insurance law" standard. Since the majority of agricultural
insurance business with policy, its business philosophy, business model, business
rules and business methods and management of insurance is fundamentally different,
so the existing "Insurance Law" does not apply or do not fully
apply to agricultural insurance. Unable to follow, so that agricultural insurance in
many areas there is a legal vacuum, in a dominant position in agricultural insurance is
not clear, even if the government actively participate in and promote, a lack of legal
basis. Lag in legislation restricting the development of agricultural insurance in China
is one important reason. Therefore, China needs to learn from international experience,
specifically through legislation at all levels of government work in agricultural
insurance in the function and role, a clear national policy to protect the input and
measures, specifically the implementation of agricultural insurance, the scope and
implementation modalities, specifically regulate the operation of the main agricultural
insurance participate in the main, the main benefit of the rights and obligations. From
all over the country carried out pilot current situation of agricultural insurance, vary
widely between various parts of the current conditions of national uniform legislation
is not yet ripe. To finish the pilot local governments, insurance regulators and
agricultural insurance company in the area of agricultural insurance business model,
develop appropriate agricultural insurance local regulations. According to local
regulations and conditions of the trial, the development of agricultural insurance
regulations by the State Council until the conditions are ripe, then the development of
agricultural insurance law.

				
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