ArmInfo. The implementation of the agricultural risks insurance program, which practically began at the end of last year, has shown its effectiveness and even to a certain extent exceeded the expectations of insurers. Specialist in agricultural insurance, Head of the Underwriting Department of "INGO Armenia" insurance company Levon Kocharyan said in an interview with ArmInfo.
According to the specialist, despite some fears of insurers, however, local farms reacted positively to the provided opportunities to insure their costs and in the overwhelming majority of cases reacted to this with a high degree of confidence. Nevertheless, according to Kocharyan, in order not to lose this confidence and to successfully continue the implementation of the program throughout the country, it is necessary to take seriously the training of independent experts - risk assessors, the limited number of which, in fact, does not allow promptly providing peasants with insurance compensation.
As the specialist noted, despite the fact that the Agriculture Insurers National Agency (AINA) under the Central Bank of the Republic of Armenia prepared a sufficient number of specialists - damage assessors for the start of the project, spending a certain amount of resources on this, more than half of the trained personnel in the future, under the pretext of the coronavirus pandemic and others reasons, have abandoned work. This circumstance caused certain difficulties and natural dissatisfaction among the villagers, who could not receive insurance compensation in an expeditious manner. Nevertheless, the payment process continues, and today the issue of determining the legal obligations for those who will be trained as damage assessors is being considered.
At the same time, according to Kocharyan's estimates, the level of unprofitable insurance of agricultural risks was 100-110% - which is quite a good indicator for starting the development of a new market segment, taking into account 90% of risk reinsurance. The results of the first half of the year, according to the specialist, already allow expanding the list of agricultural crops covered by insurance, adding crops such as potatoes, berries, cherries, etc.
According to the expert, over the next 2-3 years, this area of insurance will be beyond high unprofitability and the level of risk reinsurance will remain at 90%.
To note, insurance companies of Armenia showed the first results of insurance of agricultural risks - in the first half of 2020, premiums were collected amounting to 131 million drams, of which 82.2% or 107.6 million were transferred for reinsurance. In the reporting period, compensations for this class were paid in the amount of 8.4 million drams, in particular, 6.1 million from Rosgostrakh Armenia, and 2.3 million from Sil Insurance.
The Central Bank of Armenia intends to gradually expand the agricultural insurance program both in terms of covering a wider range of agricultural crops and the risks covered by insurance. In the meantime, at this stage, insurance applies to apricot, apple and pear orchards, vineyards, spring and autumn grain crops, and hail, frost and fires are defined as insurance risks. To recall, the agricultural risks insurance program was launched in Armenia in September 2019, and is still in pilot mode, covering six regions and with the partnership of three insurance companies (INGO Armenia, Rosgosstrakh Armenia and Sil Insurance). The IC began selling policies at the beginning of this year. The purchase of an insurance policy is subsidized by the state in the amount of 50-60% depending on the natural risk, and with full insurance there is a 10% discount. The reinsurer is a large Swiss company "Swiss Re". The Agriculture Insurers National Agency (AINA) is responsible for: development of standard agricultural insurance products, conditions and regulation of the state subsidizing process; market research and actuarial calculations; training and professional development of damage assessors; control over partner insurance companies.