ARMENIA: the government is ready to support agroinsurers and partially assume risks

17 April 2024 — Marina MAGNAVAL
As part of the pilot agroinsurance program, the Armenian government will not only subsidize insurance premiums, but also compensate the costs of insurance companies if a certain threshold of insurance payments is exceeded, as Minister of Economy Gevorg Papoyan said on April 12, ArmInfo writes.

“In 2023, 11,662 hectares of land were insured, insurance premiums amounted to about AMD 1.8 billion (~EUR 4.02 million) (total compensation was AMD 2.7 billion/~EUR 6.03 million), as of December 31, about 3,864 claims were paid in the amount of about AMD 2.7 billion. In 2024, due to the exit of the reinsurance company from the Armenian agroinsurance market, insurance companies were unable to take on insurance risks in full, given the high losses caused by climate change. For this reason, the program started late this year, and therefore it was necessary to find a temporary solution for 2024 and change the approach of the program”, explained Gevorg Papoyan.

The minister noted that to ensure participation of insurance companies in the program, it is proposed this year that, in addition to subsidizing insurance premiums, the government is ready to partially take on the insurance risk, that is, to support insurance companies by providing compensation if a certain threshold of insurance payments is exceeded. “In particular, reimburse each insurance company - a member of the agency 80% of payments to business entities, exceeding 70% of the collected insurance premiums”, the minister added.

The agroinsurance program was launched in Armenia in September 2019 and continued to operate until 2023, in fact, in pilot mode, covering six regions of the country. The purchase of an insurance policy is subsidized by the state in the amount of 50–60%, depending on the risk. The reinsurer was Swiss Re. The National Agricultural Insurers Agency (AINA) was created, which was entrusted with: the development of standard agricultural insurance products, conditions and regulation of the state subsidy process, actuarial calculations, and other functions.

*1 EUR = 447.90 AMD (December 31st, 2023)