National Association of Agriculture Insurers

NAAI: restoration of the agricultural insurance system of Russia continues; the area of insured crops increased by 5 times

The restoration of the agricultural insurance system in Russia continues - confirmed by the data accumulated by the National Association of Agriculture Insurers for the first 7 months of 2019. “The results presented by members of NAAI on the 01st of August, 2019, confirmed the trend of steady growth for all agricultural insurance system indicators,” said the President of NAAI, Korney Bizhdov. “The area of agricultural crops insured with state support reached almost 2.8 million hectares. This is 5 times higher than for the same date last year - 552 thousand hectares. ”

Livestock insurance also noted a 25% increase in coverage compared to the same period last year: 3.1 million head are now insured, up from 2.5 million on the 01st of August a year earlier. “These results show the effectiveness of measures taken to restore the system of agricultural insurance by the Ministry of Agriculture, the Ministry of Finance and the Central Bank of Russia, the NAAI and agricultural organizations in several regions of the Russian Federation” said NAAI President, Korney Bizhdov.

The President of NAAI noted that the insured area of crops in 2019 already exceeded the 2018 indicators and is 2.4 times the size of the insured sowing for 2018 (1.2 million hectares). “Thus, sowing covered under the contracts of 2019 has already exceeded 3% of the total sown area. Together with winter crops insured last fall, it reaches 4%,” said Korney Bizhdov. “If winter sowing indicators reach at least the level of last year, then the first marker of the “Road Map” set for the development of agricultural insurance, which was presented by the Ministry of Agriculture last year, will not only be achieved, but also exceeded.”

The President of NAAI recalled that a set of measures to develop the agricultural insurance system – prepared by the Russian Ministry of Agriculture on behalf of Prime Minister Dmitry Medvedev – was presented on the 25th of September last year at a meeting with the Head of the Ministry, Dmitry Patrushev. This plan provides for an annual increase in insurance coverage of agricultural land of 1-2% of the total area in the Russian Federation, reaching a coverage rate of at least 11.3% of the all-Russian arable land by 2025. For 2019, the plan announced coverage of 3.3% of the area.
The measures that influenced the situation are legislative changes that allowed agricultural producers to choose more flexible conditions regarding the level of deductibles and insurance amounts, provided additional unrelated support to insured households, and changed the standards for compensation payments to agricultural producers in case of emergencies, which began to take the fact of insurance into account.

“When insuring winter crops, attention should be paid not only to restoring the agricultural insurance system, but also to its quality development,” said the President of NAAI, Korney Bizhdov. “Now the right granted to farmers to choose more flexible conditions and risks has allowed expanded coverage, but the question remains as to how these preferences are adequate to the risk profile for agriculture in specific regions. Perhaps the agrarian authorities of the regions, together with NAAI, should actively advise their agricultural producers on agricultural insurance issues. NAAI will analyze insurance and claims settlement practices this year and give recommendations to the agricultural organizations on organizing insurance coverage for farmers. In addition, to further expand coverage, it may be necessary to return to the topic of introducing additional agricultural insurance programs into the system. Thus, the development of a special program for insuring the costs of replanting winter crops was provided for by the “Road Map” for 2019."