National Association of Agriculture Insurers

NAAI: agriculture enters 2015 with an updated system of agricultural insurance

On December 22 the Russian President Vladimir Putin signed into Law No. 424-FZ "On modification of the “Federal Law on State Support of Agricultural Insurance “ It is the first correction of the system of government-subsided agricultural insurance after introduction of the relevant law No. 260-FZ on state aid of agricultural insurance, entered into force 2012.
The main innovation of the law is reduction of the threshold of crop failure at which the loss is considered to be an insurable event, from 30% of the planned level to 25% in 2015. Four new disastrous phenomena are added to the list of insurable risks: flood, under flooding, river flood and landslide. Thus the level of the maximum deductible in crop insurance (hazard rate which the agrarian can leave on his own deduction) (percentage of value deductible) is reduced from 40% to 30%.
The transition to united association of the insurers working at the market of agricultural insurance with state aid according to the new law will be coordinated by the Central Bank of the Russian Federation. One-year transition period is given for this procedure: any work beyond the united association will be forbidden since 2016.
"The primary target for the National Association of Agricultural Insurers from the beginning of 2015 will become the adaptation of work in the branch to new conditions of activity. The new law allows for essential expansion of responsibility of insurers and transition to the united association of insurers in the market of agricultural insurance with state aid of the Russian Federation. Crop insurance agreements on new terms can be already signed during spring sowing.” Raising of responsibility and providing of seamless operation of the system is required from the whole insurance industry, as well as from regional bodies of agro- industrial complex”, – declares Korney Bizhdov, the president of the National Union of Agricultural Insurers, the chairman of Agricultural Insurance Committee of the All-Russian Insurance Association.
NAAI draws the growers’ attention to the fact that the law also allows for a number of modifications in government-sponsored agricultural insurance practice. "More specifically, of great importance for agricultural producers is the provision that entitles the insurer to make an accelerated insurance prepayment in case of crop losses occurrence and cover grower’s expenses of reinoculation", –K.Bizhdov, president of NAAI , points out.
The National Association of Agricultural Insurers was founded in 2007 with active support of the Ministry of Agriculture of the Russian Federation, Ministry of Finance of the Russian Federation, Federal Service of Insurance Supervision and the All-Russian Insurance Association. The Association provided the consolidation of federal and regional companies, interested in improvement of agricultural insurance, and became the centre of development of modern government-sponsored insurance of agricultural risks, which is equitable to interests of both agricultural producers and insurers of Russia. So far 25 insurance companies have joined the Agency. The overall charter capital of the companies joined NAAI makes about 70 billion rubles, total own assets – about 150 billion rubles.