LIVE: BAKU: "Insurance in Azerbaijan: New perspectives" Conference - Day 2
Read here the main statements:
Vladimir STEJSKAL,Head of Analytics, Central and Eastern Europe, Nordic, Greece, Cyprus and Middle East, AON Benfield, Czech Republic
- A natural catastrophe is a major adverse event resulting from natural processes of the Earth. It can cause loss of life or property damage.
- The natural catastrophes can be classified as geological (earthquake, volcanic eruption, landslide), hydrologic (flood, tsunami), meteorological, (thunderstorm, hailstorm, tornadoes etc.), wildfire and space disaster (solar flair, asteroids)
- 2017 was exceptional year in terms of catastrophe activity with overall amount of insured losses of 134 billion USD in comparison to 56 billion in 2016
- The annual proportion of non-insured losses varies between 60-80%
- Commercially available cat models appeared on the late 1980s in the USA. The demand for this type of solution significantly increased after the 1992 Hurricane Andrew when the US market saw 11 insolvencies. In 2005, after Hurricane Katrina, only 3 insolvencies took place despite considerably higher financial impact of the event
- Reinsurance was the first segment of the insurance industry that adopted the catastrophe models. Catastrophe treaties can be hardly structured and placed without the modelling
- The most common output of the cat modelling is Probability vs Modelled loss
- The goal of cat modelling is to estimate possible losses while minimizing uncertainties.
Christopher GENILLARD, Managing Director, Genillard & Co, Germany
- Challenges for agriculture insurers: climate change, remote sonsors and big data for insurance
- The trend is towards the developments of multi-peril products
- Internationally, 3 markets account for 2/3 of the global agricultural insurance premium: USA 11,47 billion USD GWP vs China 7.71 billion USD
- In the EU, Spain is the biggest insurance market with 647 million EUR with a total EU market in excess of 2 billion EUR
- Farming itself is changing rapidly from traditional small and medium size farmers to industrial enterprises with large-scale farming
- In order to combat the protection gap with start with a holistic risk analysis, then we create the technical base tools to understand the risks. we then evaluate and model the entire spectrum of natural perils and commercial risks to which crops are exposed, including those stemming from climate change. We then forge a PPP involving national insurance industry and other relevant and Governmental stakeholders in order to design a complete risk profile and a model
- Agriculture is very important for Azerbaijan with 55% of the total area being suitable for this purpose.
- Today, most farmers in Azerbaijan have no crop insurance and therefore no access to credit. A compulsory pubic-private solution makes absolute sense. A state programme and Law is underway to remedy this situation through creation of an agriculture insurance pool in 2019
Firdovsi AGHASHIRINOV, Senior Specialist, Financial Markets Supervisory Authority, Azerbaijan
- There are 2 strategical roadmaps that we follow in order to introduce agricultural insurance in Azerbaijan
- Our target is to establish effective, flexible, durable and reliable agricultural insurance system in the country
- Reasons to develop agricultural insurance in Azerbaijan: increase production, to increase the GDP level, to reach the growth in the share of the non-oil system, increasing food security, to increase investments in agriculture and to improve the lives of farmers
- Until now we have established a Task Force after consulting the international experience; we have chosen a model and then drafted the Law on "Agricultural insurance"
- In 2017, the agriculture insurance market reached a GWP of 4,3 million AZN with a market share of 0,8%. Loss ratio is 96%. 4 insurance companies sell these products.
- Agricultural insurance has a long tradition in Turkey with the first products appearing at the middle of the last century
- TARSIM was founded in 2005 and built as "a public-private partnership in Agricultural Insurance in Turkey". Its main aim is to provide the insurance coverage for such catastrophe risks like drought and frost that cannot be covered by a single insurance company
- In short, the TARSIM system consists of the Agricultural Insurance Pool and Management Company, which is responsible for managing all works and procedures of this pool. The state-subsidised voluntary agricultural insurance system is one of the best examples of cooperation between the state, private sector and NGOs
- Thew agricultural segment is holding 4,4% of the Russian GDP..The insurance scheme in Russia was introduced in 2010
- 60,7 biillion insurance premiums on agricultural insurance between 2012-2017, with state subsidies
- all the insurance companies that are selling this policies must be members of the National Union of Agroinsurance.
- in 2017 we changed the system of state subsidized system..thy granted to the local authorities to decide how to use the funds for subsidising the insurance...as a result the volume of the agricultural insurance decreased dramatically.. We are very interested to change the situation with the subsidies...
- Crop insurance is a very volatile business which need reinsurance support
- Generally speaking, in the crop insurance business one can expect a profit margin between 5-15% (premiums minus all deductions like losses, admin costs, sales, loss adjustment, reinsurance) in a long period of time
- Reinsurance can help in bad years and allow to earn additional money in a good season.
- It is estimated that the world population will dramatically increase by 2050. Food resources will also have to cope to this increase: we can either develop new hybrid and chemicals or, much better, invest in Digital Agriculture and create the new and super-intelligent farmer
- We offer conventional and digital services for agricultural players. We can enhance a farmers' performance by setting-up personalised crop grower protocols and Farmer Support Line
- The data that we use is collected via sensors and satellites and includes weather, soil and crop information, which we make available to farmers via a mobile app.
- We currently have the largest active database for farmers in Turkey
- Using such technologies can lover claims
- In Ukraine we are insuring mainly crops
- Survey is one of the most difficult processes in insuring agricultural risks
- The territory is very large and also, it is important that the surveyor speaks the same language as the farmer
- So, the farmer should be involved in all the operations of the survey
- The main risk that Ukraine is facing from the perspective of agricultural insurance is concerned is drought
- AON set-up a dedicated agricultural insurance programme in Ukraine and also a pricing tool that allows for the individual calculation of the insurance premium.