The agricultural risk insurance market:
Step forward, two steps back

In 2008 the agricultural risk insurance market amounted to 10-15 bln rubles, according to Expert RA. More precise assessment is barred by absence of general statistic and the market non-transparency. The RF Ministry of Agriculture maintains that only 25.5% of cultivation area is covered by insurance. The agricultural insurance market consists of two unequal parts: voluntary insurance and state-supported insurance, the latter responsible for over 70% of the market aggregate contributions.

Step back: substantial subsidy cuts in insuring agro-industrial risks would result in the market downfall. Subsidies plunged from 5.5 bln rubles to 2.2 bln rubles, some of the money would cover subsidy debts in 2008 - many agricultural enterprises are concerned about getting state subsidies to a full extent. The RF agriculture ministry should in no uncertain terms take sustained measures complemented by the market players' initiatives.

First step forward: Government decree №1091 - new initiative toward a civilized system of agricultural risk insurance. The decree provides for new rules of the state support to insure agricultural crops - subsidies would go only to the companies in compliance with the decree demands, thus blocking corruption in the state-subsidized crop insurance. At the same time all licensed insurers may participate in this type of insurance. Initiation of a domestic reinsurance market of agricultural risks is a notable achievement.

Second step forward: National union of agricultural insurers, set a year ago, achieved much more significant results than Agropromsoyuz, set 10 years ago. The Union consolidated agro-insurers in Russia and put forward numerous useful initiatives, including development of normative acts together with the Federal agency on the state support in insuring agro-industrial production.