RUSSIA: agroinsurance became one of the fastest growing market segments in 2019

12 March 2020 —
Last year, agroinsurance premiums reached RUB 5.6 billion (~EUR 80.72 million). According to Korney BIJDOV, President, National Association of Agricultural Insurers (NAAI), "agroinsurance turned out to be one of the fastest growing segments of the insurance market in Russia, showing a 51% y-o-y increase", ASN reports.

As the main growth factor, the NAAI President noted the recovery of insurance with state support. GWP generated under contracts with state support grew by about 124% y-o-y. At the same time, GWP of agroinsurance without state support dropped by 28%, which, as BIJDOV believes, is a natural trend, since insurance options with state support are now more affordable and more interesting to policyholders. Paid claims of agroinsurance also saw an increase y-o-y (+28%) to RUB 2 billion.

"In 2020 NAAI expects that agroinsurance will keep such positive dynamics. Now there is an active discussion of possible options for further improvement of the agricultural system in Russia with the Ministry of Agriculture, the Ministry of Finance and the Central Bank", BIJDOV said.

"In order to reduce losses of agricultural enterprises, we'll continue to develop agroinsurance, and the funds for that are provided in the budget", said the Head of the cabinet, Mikhail MISHUSTIN. He noted that in 2020 the government will allocate about RUB 320 billion to support the agricultural sector and develop rural areas. At the same time, the Minister of Agriculture, Dmitry PATRUSHEV emphasized that in 2019 the damage of agricultural industry from natural disasters amounted to about RUB 13.2 billion, which exceeds total damage of the industry from natural disasters over the past three years.

As the minister explained, "in 2019, several amendments to the relevant federal law were made, and that allowed to increase the insured areas. Thus, in 2019 the volume of insured areas reached 4.3 million hectares - three times more y-o-y. However, we understand that there is still a lot to be done. According to the estimation of the Ministry of Agriculture, in 2020 it is planned to insure at least 6.2 million hectares, which is 8% of the total volume, therefore, taking this opportunity, I'd like to ask the regional authorities to intensify work in this direction in their territories".

"Based on NAAI estimation, total insurance coverage of crops this year may reach 10-12% of all areas in Russia. According to NAAI, insurance companies are ready to insure crops and livestock in no less than 68 regions of Russia, while at least 7.8 million hectares can be insured", BIJDOV added.

*EUR 1 = RUB 69.3777 (as of 01.01.2020)