ArmInfo.As part of a pilot program to introduce an agricultural insurance system, the Armenian government will not only subsidize insurance premiums, but will also compensate the costs of insurance companies if a certain threshold of insurance payments is exceeded.
As Minister of Economy Gevorg Papoyan stated at a government meeting on April 12, presenting the corresponding draft decision, the adoption of the project is due to the need to ensure the implementation of the pilot program for the 2024 agricultural year. He recalled that under the program in 2023, apricots, grapes, peaches, plums, apples, cherries, cherries, watermelons, melons, potatoes, crops of autumn/spring wheat, barley and oats are insured. The insured risks were: spring frosts, drought, hail and fire. "For the 2023 agricultural year, 11,662 hectares of land were insured, the insurance premium amounted to about 1.8 billion drams (the total volume of compensation was 2.7 billion drams), as of December 31, about 3,864 insurance compensations were paid for about 2.7 billion drams.
In 2024, due to the withdrawal of the reinsurance company from the RA agricultural insurance 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 in this year, and therefore it was necessary to find a temporary solution for 2024 and change the approach of the program," Papoyan said. The minister noted that to ensure the 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, it is planned to compensate each insurance company that is a member of the agency with 80 percent of the insurance benefits compensated to the entrepreneurs exceeding 70 percent of the sum of the insurance premiums collected by the insurance company," explained the head of the Ministry of Economy.
According to Papoyan, in 2024 the government will support the operating and other expenses of the National Insurers Agency through agricultural insurance.
"Based on crop insurance terms according to crops and risks, we plan that this year we will be able to insure peaches, plums, apples, cherries, cherries, watermelons, melons, potatoes against the risk of hail, and grain crops wheat, barley and oats against the risk of drought." said Gevorg Papoyan. The minister presented the changes made to the list: cereal crops will not be insured against hail this year, but will be insured against drought, and, for example, apples, cherries, cherries will not be insured against spring frost. The agro-risk insurance program started in Armenia in September 2019 and continued to operate until 2023, in fact, in pilot mode, covering six regions of the country. The sale of insurance policies began at the beginning of 2020. The purchase of an insurance policy is subsidized by the state in the amount of 50-60%, depending on the natural risk, and there is a 10% discount in case of full insurance. The reinsurer was the large Swiss company Swiss Re. Also the Agricultural Insurance National Agency (AINA) has been established, which was entrusted with the development of standard agricultural insurance products, conditions and regulation of the state subsidization process, actuarial calculations and other functions.
