Expert: The agricultural insurance program has shown its  effectiveness, despite the 100% loss ratio

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.