Baku, Azerbaijan, June 22
By Anvar Mammadov – Trend:
The role of insurance companies in the new model of agricultural insurance offered in Azerbaijan is very passive, the President of the National Association of Agricultural Insurers (NAAI) of Russia Korney Bizhdov believes.
He noted that, this may lead to the fact that insurance companies again won't be interested in working in the field of agricultural insurance.
"The model implemented in Azerbaijan is based on the TARSIM model created in Turkey. This is a working system, and it will probably bear fruit in Azerbaijan. In my opinion, it has one drawback - passive role of insurance companies. The role of insurance companies is reduced to the agency functions, and they practically do not assess risks, do not participate in the pricing and settlement of losses", Bizhdov told Trend June 21.
Bizhdov added that, the new model also reduces the support for insurance companies by the state.
"This leads to the fact that in case of catastrophic losses the state will replenish the funds of the Agricultural Insurance Fund. There is no other way out - the formation of reserves and the participation of insurance capital is excluded. And for the insurance community in this case, the support by the state is excluded," the president of the NAAI said.
According to the new model, the farmer will apply to the insurance company, which will play the role of an insurance intermediary. That is, insurance companies in this model play the role of agents only, and do not bear any risks and receive interest from contracts. In addition, the ICs can reinsure contracts in the Fund, but they will naturally bear certain risks of reinsurance.
At present, the law "on assistance and development of agriculture in Azerbaijan" in force in Azerbaijan regulates state financing of agricultural insurance premiums. The list of crops insured at the expense of the state budget, in addition to wheat, includes barley, corn, sunflower, potatoes, sugar beet, etc.
The average tariff for agricultural insurance in Azerbaijan is about 1,500 manats per year (5 percent per hectare), despite the fact that the average profit per hectare of land is about 25,000 manats per year.
According to the data of the Financial Markets Supervision Chamber of Azerbaijan, at the end of May 2018, fees on the agricultural insurance market amounted to 1.56 million manats, while payments amounted to 282,900 manats. A large part of the fees and charges in this area - 947,700 manats - fell to the share of the insurance of agricultural animals.