NAAI directed recommendations on the fulfillment of the Russian president’s instructions
The National Association of Agricultural Insurers renders assistance to its members on their implementation of the recommendations contained in the instructions of the Russian President V. V. Putin on the accelerated and simplified insurance payments in emergency area in Southern Siberia, according to both government-subsided and commercial agreements for agricultural insurance.
On June 16 the Russian President V. V. Putin gave an assignment in which it is offered the Government of the Russian Federation together with the Bank of Russia "to recommend insurance companies to accelerate insurance payments process according to contracts, including agricultural producers, by reducing the list of the submitted documents and simplifying the procedure of their representation".
"In 2013, also according to the instructions of the Russian President, a precedent of accelerated government-subsided agricultural insurance payments in the Far East regions that suffered from flood was created,” – Korney Bizhdov , the president of NAAI, points out. – “Thus certain regulatory matters arose which were resolved with the assistance of the Central Bank of the Russian Federation. The level of government-subsided agricultural insurance penetration in affected regions in Southern Siberia is even lower, than in the Far East: as of the current date NAAI has information only about 2 government-sponsored crop insurance contracts for the total sum insured of 70.9 million rubles and about 11 livestock insurance contracts in the Republic of Tyva, for the total sum insured of 71.2 million rubles. The data losses under these contracts haven't been reported yet. However, in the 1st quarter of the current year 174 non-state funding agricultural risks insurance agreements were signed in Altai Region, mostly by members of NAAI, 20 of such contracts – in the Republic of Khakassia and 4 – in the Republic of Tyva. In this regard we are ready to assist insurers and growers with consideration of the problematic issues connected with specifics of agricultural insurance in making simplified payments and with interaction with regulatory authorities".
The National Association of Agricultural Insurers considers that the flood in South Siberia once again highlighted problems in the organization of government-subsided agricultural insurance in the region, the problems that should be taken into special consideration by local authorities and regional agriculture government bodies. According to the current data, in fact there was no government-subsided agricultural insurance in Altai Region which was the worst affected area in 2014. "The data indicate that in 2013 agricultural insurance in Altai Region disappeared: insurance with state support, and without it: both markets decreased more than 90% in volume, – the president of NAAI comments. – In these circumstances, just NAAI made government-subsided agricultural insurance payment in Altai Region in 2013 which was three times more than present flood damage in the region is estimated. The situation has a number of explanations – in particular, according to the survey among NAAI members in 2013, Altai Region was noted as one of the most complicated from the point of view of transparency of subsidizing process. But last year legal proceedings on subsidy fraud in agriculture could have had the most negative impact on agricultural producers , and especially on insurance – the so-called "Kufayevs' case" and some other, relating to the period 2008-2011, before the present system of state supported agricultural insurance had been introduced . As practice shows, such "schemes" take a heavy toll of agricultural insurance image, throwing several years back the development of market in every region where they used to be common."
The Minister of Agriculture, Nikolay Fedorov, reported that the total area of crop failure caused by flood at the end of May – the beginning of June, is not so big – just about 13 thousand hectares, 12 thousand ha of which are in Altai Region, and more than 1 thousand ha – in Altai Republic. In the Republics of Tyva and Khakassia only livestock was lost amounting to 7 and 13 million rubles respectively. Thus damage to plant growing, valued at prime cost, according to preliminary estimate is about 35 million in Altai Region and 6 million in Altai Republic. The total damage can be lower as the possibility of resowing remains. The minister reported that now the work on a preliminary expert estimate is being carried out, and the ministry can partially cover losses. "The Ministry of Agriculture does have reserves (…), seasonal risks reserves. For the first time this year such item is provided in the federal budget", – the head of the ministry declared. "If crops had been insured, we wouldn't speak about budget funding now, – Korney Bizhdov, the president of NAAI points out. – I will remind that the insurer can provide financing of resowing to reduce the insured loss when the government-subsided insurance is provided".
The National Association of Agricultural Insurers was founded in 2007 with active support from 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 for the consolidation of crop insurance development activities of federal and regional companies, interested in improvement of agricultural insurance, and became the centre of development of modern government-sponsored agricultural insurance, meeting the interests of both agricultural producers and insurers.
So far 23 insurance companies have joined the Association. The overall charter capital of NAAI members makes about 70 billion rubles, total own assets about 150 billion rubles.