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2NECESSITY OF INSURANCE OF AGRICULTURAL PRODUCTS: WORLD
EXPERIENCE Arziboyeva Sevarakhon Boburjon kizi
Student of Agrobiology, Andijan Institute of Agriculture and Agro-Technology https://doi.org/10.5281/zenodo.10930876
Abstract. This article discusses the experience of agricultural insurance in developed and developing countries is described. The changes taking place in the Uzbek agricultural insurance on the basis of international experience. It is proposed to introduce index insurance in developing countries along with traditional "expensive" insurance products.
Keywords: index insurance, pilot project, developed insurance systems, benefits of index insurance.
INTRODUCTION
At present, agriculture is provided with no more than 20% insurance coverage. The lack of a unified methodological framework for insurance and reinsurance in agricultural insurance, as well as an adequate regulatory framework, hinder the development of this insurance industry. The current state of development of agricultural insurance dictates the need to form a systematic approach to its development, which provides for the definition and legislative registration of the forms of interaction between the three main participants in agricultural insurance - agricultural producers, insurers and the state.
MATERIALS AND METHODS
Most governments of various states have understood the need to implement risk management systems. Previously, many states paid subsidies to producers per 1 ha of crops or head of farm animals. Now this practice is being reviewed and there is a transition to risk management.
Insurance is the main strategy for weather risk management in the agricultural sector. The development of high-quality insurance products and programs makes it possible to ensure the stability of the financial situation of agricultural producers and reduce the cost of the state budget to support the agricultural sector.
RESULTS AND DISCUSSION
Agricultural insurance systems in different countries are at different stages of development. The most developed systems exist in the USA, Canada and Spain. In developing countries, the most striking example is India, where in recent years the government and insurance companies have launched several new programs [1].
In terms of the level of development of agricultural production, the United States has long and convincingly occupied a leading position in the world. One of the reasons for such stability is the successful state policy aimed at supporting farmers, as well as effective cooperation between the public and private sectors. In the US, subsidized agricultural insurance is administered by the Risk Management Agency (RMA). Insurance products are developed by the agency, but insurance services are offered by private insurance companies (there are from 14 to 20 in different years), which are accredited for the right to work under the subsidized insurance program. Insurers are required to reinsure part of the risks through the state reinsurance fund, but they bear most of the responsibility for making payments. The conditions of insurance products are strictly regulated. Insurers work according to insurance rates, which are developed and adjusted by the agency. The part of the subsidy is 50% of the premium with a coverage of 70%. Depending on the strategic
goals and characteristics of crops, part of the subsidy can be 30-60% (this depends on the percentage of coverage). Subsidies are paid to insurance companies, and the farmer only has to pay his share of the premium. Catastrophic coverage (27% of average multi-year farm income) is provided to farmers for a small fee ($100).
This program allows the US government to almost completely refuse to provide assistance to producers who lose crops due to adverse weather conditions. Currently, more than 50% of agricultural producers and approximately 70% of agricultural land are insured. More than 150 different insurance products are offered for multi-risk and index insurance [2].
In Canada, subsidized insurance is introduced through royal corporations operating in each province. These corporations are public companies operating on market principles. Each corporation develops its insurance programs based on the guidelines of the Federal Ministry of Agriculture. Due to the specifics of agricultural production in the provinces and the financial possibilities of the budget of each federal unit, insurance programs differ, but these differences are insignificant. Subsidies are, as a rule, 50% of the premium amount, with a coverage of 70%. The farmer pays only 50% of the premium amount under the contract. The insurance subsidy is paid to the royal corporations from the budgets of the federal and provincial governments in equal parts (25% and 25%). The franchise is not used.
In Spain, insurance companies (there are 27 of them) act as agents. All signed insurance contracts are transferred to a company established jointly by the state and private insurance companies, which administers contracts, assesses damages and pays out. All risks are reinsured through the state reinsurance company. More than 100 crop and animal insurance products are offered. Tariffs are calculated by the state company.
On the basis of international experience in Russia, a draft law developed by the Ministry of Agriculture of the Russian Federation together with deputies and senators was adopted. This project is based on the following main principles [5]:
• state-supported insurance also includes animal insurance;
• the availability of an insurance policy against catastrophic risks is established as a mandatory condition for the provision of subsidies to agricultural producers in other areas of state support in the field of agricultural production.
Perhaps this draft law will provide a comprehensive modernization and increase in the efficiency of the agricultural insurance system. It should not be forgotten that traditional crop insurance products require complex contract administration solutions (underwriting, monitoring, loss assessment and information collection), so they are often not suitable for developing countries due to their high cost. Unfortunately, not every farmer in Russia will be able to afford such a policy, even if the future law provides for the payment or reimbursement by the state of part of the insurance costs.
Ways to overcome the most significant problems of agricultural insurance in foreign countries
Limitation
Solution
Problem 1. Lack of incentives for agricultural producers to conclude an insurance contract: - - availability of an alternative support system for agricultural producers in case of crop failure - - poor product line - - inconvenient payment terms - - a significant number of disputed cases in the settlement of losses Canada. If insurers offer insurance for a particular crop, then the agricultural producer will no longer be able to turn to the state for help. If the insured decides not to participate in the subsidized insurance program, he loses the right to receive any agricultural government subsidies for the next three years USA. The minimum insurance coverage - catastrophic - involves compensation for losses in case of a shortage of 50% of the crop. The entire premium for this product is subsidized by the US government, and the farmer pays only a flat fee to participate in the program. In total, there are more than 370 insurance products in the field of agricultural insurance in the country. The coating has been developed for more than 100 crops. Canada. The policyholder can choose the level of coverage of 50, 60, 70, 80, 85 and 90%. Spain. The agricultural producer enters into an insurance contract with Agroseguro JSC, which acts on behalf of insurance companies and applies directly to the state for subsidies. USA. Субсидии выплачиваются страховым компаниям. Фермер должен уплатить только свою часть суммы премии. Austria. In case of non-payment, premium subsidies are returned to the governments of the Federation and the provinces, each of which receives 25% of the returned amounts. Europe, Latin America, Africa and Asia. weather index. An insured event is a fall of the indicator below the calculated value. Benefits: no need to inspect crops, clarification of damage, no anti-choice and moral hazard
Problem 2. Lack of incentives to increase the level of productivity of agricultural holdings Canada. The premium for the insured is based on risk parameters by culture, region and its individual farm. Austria. Farmers provide data on their activities (yields), which are used to determine discounts (discounts)
Problem 3. Financial imbalance of the system Spain. Agricultural insurance plans are developed by the ENESA agency for a three-year and annual period and are approved by the ministries of agriculture and economy
Problem 4. Financial instability of the system USA. The government provides first level reinsurance to insurance companies. Australia. Risk retention by local branches of insurance companies is about 20%. The remaining 80% are reinsured by companies with a reliability rating of at least "A" assigned by S&P.
Problem 5. Corruption and non-transparency of the system
Problem 6. Low level o infrastructure development: - - lack of an institute of independent expertise
- - undeveloped statistical base
ain. On-site loss assessment is performed by independent experts who work on the basis of an agreement with Agroseguro JSC, and not with individual insurance companies.
Australia. Losses are settled and assessed by several specialized companies (loss-adjusters), which report primarily to underwriting companies.
Canada. The coverage is provided to the farmer in the form of a ;uarantee of harvested crops and is based on the farmer's individual statistics.
Australia. Field crop and cotton insurance rates are based on years of hail damage statistics. Similar information about wheat has been collected since 1965. It is the basis for all field crops, even orchards and vineyards.
CONCLUSION
Recently, vertical integration has become widespread in the agro-industrial complex. The formation of agricultural holdings that unite enterprises and organizations in various areas of the agro-industrial complex allows solving some of the problems associated with price risks in organizations of both agriculture and the processing industry. This reduces the financial risks of organizations - members of agricultural holdings. The sector of weather risk management tools is still quite young, and its rapid development depends on the activity of those who provide these services and those who use them. However, it should be kept in mind that easy and inexpensive access to historical weather data is a key factor for the development of effective financial weather tools.
REFERENCES
1. Grishchenko N. B., Gritsenko G. M., Zimina A. P. Agricultural insurance system: theoretical aspect // Finance and credit. 2017. No. 11.
2. Grishchenko N. B., Sergeeva N. V. Regional aspects of insurance // Insurance business. 2010. No. 8.
3. Egorov D. I., Ivashkin E. I. On the formation of the legal framework for agricultural insurance with financial support from the state // Vestnik REA. 2010. No. 2.
4. Eremina O. I. Prospects for the development of insurance in the agro-industrial sector of the Russian Federation // Actual problems of modern science. 2011. No. 6.
5. Kurennaya V. V., Rybasova Yu. V. Efficiency of the agrarian sector of the economy: social aspect // Bulletin of the APK Stavropol. 2012. No. 3.
