The main reason for deterioration is the increased size and level of complexity of the bureaucracy because of the new subsidy law. Previously, for a decade and a half, insurance companies were involved in the formation and submission of applications to AIPA for subsidizing agroinsurance contracts, and starting this year, this should be done by farmers.
This year, according to insurers, no government subsidies have yet been paid under subsidized agroinsurance contracts. This means that insurance companies for insured events that occur under subsidized insurance contracts so far only reimburse 30% of the amount of damage to farmers (the remaining 70% is a state subsidy). The previous regulatory framework established the payment period for this subsidy at two months. The new legislation does not establish deadlines for payment of subsidies and compensation under subsidized insurance contracts. Accordingly, arrears on subsidies after a certain period (270 days) are reflected in the financial performance of insurance companies - their solvency worsens. This is not profitable for insurance companies since their interest in insuring agricultural risks is decreasing.