ArmInfo.From March 2019, a pilot program of agricultural risks insurance will be launched in 5 regions of Armenia. Answering the question of ArmInfo, Armenian Deputy Minister of Agriculture Gegham Gevorgyan said this on January 31 after a government meeting.
According to Gevorgyan, despite the fact that earlier it was announced that only two regions were included in the pilot program - Ararat and Armavir - it was decided to expand the list of beneficiaries to five. As a result, the Vayots Dzor, Tavush and Aragatsotn regions were added. About half a billion drams will be allocated for financing the program. At the initial stage, the insurance will concern fruit and vegetables - apricots and grapes. Insured risks will be hail and frost.
According to the deputy minister, several insurance companies have already expressed interest in participating in the program. However, he abstained from naming them, noting that he would do it after documents of cooperation are signed with them.
As ArmInfo informed earlier, a pilot program on agro-insurance is planned to be implemented in the Ararat and Armavir regions of Armenia, which will cost the state treasury 360 million drams. The possibility of testing the program in the Shirak region of the republic is also discussed. "Nothing like this has been done before - the system provides for 100% compensation for farmers' losses," egham Gevorgyan said in the end of November 2018. "All farmers are unequivocally in favor of the introduction of the program," Gevorgyan said, stressing that the program provides for subsidized insurance contributions. The subsidies will make 60-65% of the cost of the insurance policy, and the farmer will have to pay 30-35 thousand drams per 1 hectare.
As the heads of the Ministry of Agriculture have repeatedly stated, it is the agricultural risk insurance system that will become a new solution to fully cover the losses of farmers. Today, losses of agriculture from natural disasters in the amount of about 12 billion drams (about $ 25 million) are compensated by the state, but in the case of insurance, these compensations will be assigned to insurance companies.
Agricultural insurance in the field of cattle breeding is not being considered at the moment. By the end of December this year, work will be completed on the development of all necessary documents, final negotiations will be held with the Central Bank, commercial banks and insurance companies. The National Agroinsurance Risk Management Agency (NARMA)will finally be established. (As Gevorgyan noted today, the Agency was renamed but its functions remained the same). The Agency will be the tool by which the consequences of natural disasters will be evaluated. An institute of damage evaluators will be set up, the main insurable risks will be selected. NARMA will also develop insurance products. As indicated by the Acting Minister, almost all insurance companies operating in Armenia are interested in participating in the program.
According to the Ministry of Agriculture, the German KfW bank will allocate a grant of 5.3 million euros for the implementation of a pilot program of the agricultural insurance system in Armenia. The main grant amount of 4.8 million euros should be directed solely to subsidize the purchase of insurance policies by farmers. The remaining amount of 515 thousand euros will go to cover the costs associated with consulting. At the same time, the RA Government, represented by the Ministry of Agriculture, will come up with a co-financing program in the amount of 5 million euros. Climate Investment Fund will also provide 2 million euros, of which 200 thousand euros will be used to subsidize the purchase of insurance policies, and 1.8 million euros - for consulting services. A consortium consisting of three companies will handle consulting. Together with these companies, the Ministry of Agriculture and the Central Bank are preparing the first pilot project on agricultural insurance in Armenia. 1.9 million euros will be allocated for the establishment of NARMA, the retraining of personnel and the formation of an institute of an appraiser, the development of by-laws and the services of a consulting company.