The National Union of Agricultural Insurers welcomes the adoption of the draft law on crop insurance in case of emergency in the State Duma, which approved it in the third reading on May 19. “At present, the NSA is preparing a package of documents necessary for the practical launch of a new line of crop insurance: draft bylaws and insurance rules. The new insurance program will be available to farmers already during the autumn sowing season, ”said NAA President Korney Bizhdov.
“The adopted changes will allow giving the agricultural industry, in addition to the already existing crop insurance program, that insurance product that can become widespread,” comments the President of the National Union of Agricultural Insurers Korney Bizhdov. - It will be a relatively simple and inexpensive basic insurance program that will guarantee the insured farms that in the event of any natural emergency leading to the write-off of fields, the bulk of the costs of cultivating dead fields will be compensated. At the same time, the procedure for insurance compensation will be simplified and accelerated as much as possible. "
“NSA was at the origins of the development of the concept of insurance against emergencies together with the Ministry of Agriculture of Russia back in 2019. The need to organize insurance coverage, as much as possible adapted to the needs of a mass agricultural producer, was supported by the agrarian committees of both chambers of parliament, a group of senators and deputies, who became the authors of the legislative initiative. The Ministry of Finance and the Bank of Russia have also made a significant contribution and continue to support the launch of a new line of agricultural insurance. "
The draft law on changing the current federal law No. 260-FZ "On state support in the field of agricultural insurance ..." is aimed at integrating the mechanism of agricultural insurance into the system of protection of agricultural production in the event of a natural emergency. In the agricultural insurance system with state support, the concept of a new risk appears - the onset of an emergency in the agro-industrial complex. The conditions of insurance in case of this risk will differ from those already in force: it will be carried out for an amount not exceeding half of the insured value of the crop, which will allow several times to reduce the cost of the policy. At the same time, for small farms, the state will compensate 80% of the costs of such insurance (for other farms, such support is introduced in the first year and then will be gradually reduced to 50%).
“The procedure for assessing damage and insurance payments will also change, which will be fixed in by-laws and insurance rules: affected farmers will receive insurance compensation for lost crops in a few weeks after the onset of an emergency, since the assessment of product loss will be based on the area of decommissioned fields. This method of reimbursement is understandable to farmers and should not cause their objections, while at the same time it will reduce the costs of the insurer for running the business, ”comments the President of the NSA.
The current conditions of multi-risk crop insurance, in which the farm in case of an unfavorable season is compensated for the total loss of production as a whole for the insured agricultural crop, will also continue to operate and will remain available to farmers who will be able to purchase it on subsidized terms together with emergency insurance. “Multi-risk crop insurance has already proven itself in regions with high yields,” comments the President of the NSA. - In 2020, plant breeders received 2,6 billion rubles of insurance payments under such policies - with a total insurance premium under these contracts of about 3,5 billion rubles. NSA believes that this direction will continue to be in demand among plant breeders in a number of regions. However, such insurance is more in demand by large agricultural enterprises, which can allocate significant funds for protection against risks, and the staff of specialists allows us to select the optimal conditions for insurance coverage in a high-quality manner. "
In 2019-2020, the agricultural insurance system with state support restored its functioning after the recession caused by the termination of subsidies in a number of regions during the period of the so-called “single subsidy” procedure. The insured area has grown 2 times over 5 years - from 1,2 million hectares in 2018 to 5,6 million hectares in 2020.
“According to the NSA, in the current spring sowing campaign, as of May 1, Russian agrarians have already insured 530 thousand hectares, which is 21% more than the same indicator for the same date a year earlier (439 thousand hectares). However, the coverage of crops with insurance is still insufficient to provide the country's crop production with full-scale protection - in 2020, only 7% of the sown area was insured, in 2021 an increase to 8-10% is possible. The introduction of emergency insurance will help solve this problem, but not at the same time. The new program will be tested in practice during 2022, and in 2023-2024 the NSA expects to reach a significant coverage of at least 30% of crops, according to a conservative estimate, ”stressed NSA President Korney Bizhdov.
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The wording of the law provides for:
- definition of the concept of an emergency for agricultural insurance purposes;
- introduction of insurance against the risk of loss of crops or plantings of perennial plantings in case of natural emergencies;
- increasing the level of subsidies by the state for the costs of small farms for insurance against the risk of emergencies to 80% of the insurance premium (today the state pays up to 50% of the cost of the insurance policy);
- the possibility of including additional programs in the system with state support;
- new mechanisms to guarantee the financial stability of the agricultural insurance system.
According to Federal Law No. 260-F3 "On State Support in the Field of Agricultural Insurance", in Russia, within the framework of a centralized system, state support is provided for insurance of risks in crop production, livestock farming and commercial aquaculture. Since January 1, 2016, a single all-Russian association, the National Union of Agricultural Insurers, has been operating on the agricultural insurance market with state support. Only insurance companies-members of the union have the right to conclude insurance contracts with state support; insurance is carried out on the basis of uniform standard rules for each insurance program.