ARMENIA: abnormal weather conditions make agroinsurance unprofitable

31 October 2022 — Marina MAGNAVAL
There is a strong slowdown in the GWP growth in the Armenian agroinsurance sector, while paid claims keep growing rapidly, which, according to experts, is mainly due to the negative impact of abnormal weather conditions on crop yields, including agricultural risks covered by insurance, ArmInfo reports.

Weather conditions mentioned include very cold winters with little snow, lack of sufficient rainfall in spring, and dry summers. According to statistics, in 2021, the harvest of agricultural crops covered by agroinsurance significantly decreased: cereals - by 37.7%, grapes - by 26.3%. In the first half of 2022, covered grain yields have already decreased by 76%.

The "Financial Rating of Insurance Companies of Armenia as of September 30, 2022" prepared by ArmInfo, includes data from three insurance companies operating in the agroinsurance segment - INGO Armenia, ROSGOSSTRAKH Armenia and SIL Insurance.

According to FinRating, agroinsurance GWP increased by 48.5% y-o-y over 9 months, and paid claims increased 4.4 times, as a result, reaching AMD 990.4 million (~EUR 2.51 million) and AMD 1.3 billion (~EUR 3.29 million), respectively.

In the total market GWP portfolio, the share of agroinsurance is 2%, in paid claims - 5.9% (vs 1.7% and 1.4% a year earlier, respectively). As a result, the profit in agroinsurance during the reporting period decreased to a loss of AMD 326 million.

*EUR 1 = AMD 393.99 (as of 01.10.2022)

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