Baku, Azerbaijan, Sept. 19
By Anvar Mammadov - Trend:
The development and improvement of a new model of agricultural insurance in Azerbaijan can result in modification of role of insurance companies in this type of insurance, First Deputy Chairman of the Board of AtaInsurance company Orhan Mammadov believes.
He noted that to date, the insurance companies are not fully ready for a new model of agricultural insurance both in terms of underwriting and taking into account the lack of experience in the companies.
"The agricultural insurance is a very complex insurance product and cannot be compared with other insurance products, such as vehicle or real estate insurance. This type of insurance requires comprehensive approach," Mammadov said.
"Today, farmers and entrepreneurs operating in agricultural parks want this type of insurance, but it should be applied throughout the country. In addition, to date, insurance companies are also not fully ready for a new model of agricultural insurance, this requires experience and time," Mammadov added.
"The role of insurance companies may change in the course of their activity," Mammadov concluded.
According to the new model, a farmer will apply to the insurance company, which will play the role of an insurance intermediary. That is, the insurance companies play in this model the role of agents only, they do not bear any risks and receive interest percentages on contracts.
In addition, insurance companies can reinsure contracts in the Agricultural Insurance Fund, but they, of course, will bear certain risks for reinsurance.
Currently, the state financing of premiums in agricultural insurance is regulated through the existing law "On assistance to and development of agriculture in Azerbaijan". 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 (five 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 July 2018, the total sum of insurance fees at the agricultural insurance market amounted to 1.77 million manats with the total sum of the insurance payments amounting to 320,800 manats.
Most of the payments and fees in this area – the fees worth 1.16 million manats and the payments worth 256,400 manats have fallen to the share of the insurance of farm animals.