The volume of the agricultural insurance market with state support amounted to RUB 2.99 billion (~EUR 42.28 million); crop insurance accounted for RUB 2 billion while livestock insurance for RUB 952 million. Compared to the same figures a year before, in general, the volume of subsidized agricultural insurance increased 2.5-fold, while the segment of crop insurance with state support grew by 269% y-o-y, with livestock insurance growing by 53%.
NAAI notes that crop insurance developed most dynamically this year. Total area of crops insured under state support jumped by 428% y-o-y. "The main driver of growth was the restoration of state support for spring sowing insurance, which occurred this year," explained the President of NAAI, Korney BIZHDOV. "In addition, a significant role was played by the updated legislative framework for agricultural insurance, which allowed farmers to choose more flexible conditions and reduce the cost of insurance policies. At present time, winter crop insurance has begun in some regions, and NAAI expects this campaign to also perform more dynamically than last year", he added.
Effective since March 1st, 2019, new conditions for farmers were established allowing them to choose risks for insurance, set deductions (ranging from 10% to 50%) and reduce insurance amount to 70% of the insured crop value. All that made it possible to reduce the average crop insurance rate from 4.19% a year earlier to 2.55%. According to NAAI, thanks to the above mentioned, over 50% of insurance contracts are already concluded with partial risk packages.
"Livestock insured under state support reached 4.2 million conventional head, up from 3.0 million a year earlier. The increase in coverage by 39% and in insurance premiums by 53% occurred while maintaining almost the same cost of insurance in this segment", as NAAI reported. BIZHDOV noted that the livestock insurance is growing. At the same time the main threat to livestock is posed by epizootics and a change in veterinary rules is necessary.
Along with increasing volumes, declared losses are also increasing based on the preliminary data, mainly due to the frequency and scale of adverse natural phenomena that affected agriculture this year. As President of NAAI noted, just for 1H2019 total amount of paid claims under agricultural risk insurance is almost equal to the claims paid during the whole year 2018.
*EUR 1 = RUB 70.7169 (as of October 1, 2019)