Azerbaijani Financial Market Supervisory Authority reveals new agricultural insurance mechanism(Exclusive)

Finance Materials 15 May 2019 19:06 (UTC +04:00)

Baku, Azerbaijan, May 15

By Aysham Rustamova – Trend:

A new agricultural insurance mechanism will be launched in Azerbaijan till late 2020, Firdovsi Agashirinov, head of the Insurance Supervision Department of the Financial Market Supervisory Authority of Azerbaijan (FIMSA), told Trend.

“Turkey’s and Spain’s agricultural insurance mechanisms were chosen as samples for the development of the bill on agricultural insurance,” he said.

“The task of creating an agricultural insurance mechanism has been set before both FIMSA and the Ministry of Agriculture,” Agashirinov said. “A working group has been created to review the international practice. The advanced models of agricultural insurance of Spain, Turkey, the US, Canada and Israel have been considered.”

“However, the attention was also paid to the negative moments in these mechanisms, so that we act flawlessly in the future taking into account the mistakes,” he said. “The draft law on agricultural insurance has been prepared on the basis of these models, taking into account Azerbaijan’s peculiarities.”

In his words, after the law enters into force, agricultural insurance will be used on the basis of a mechanism of cooperation between the state and the private sector and will be implemented through a joint insurance system. The agrarian insurance will be managed via an e-information system.

He continued by saying, "A group of experts specializing in agricultural insurance will be set up. Today, insurance companies render agricultural insurance services individually, and reinsurance companies are not interested in providing them. After the new mechanism is applied, insurance services will be rendered on a vast scale, rather than individually, which will be interesting and attractive for reinsurance companies."

Agashirinov stressed that in accordance with the new law, each direction of the agricultural sector, be it animal husbandry or crop production, will be regulated according to its rules.

“There will be separate acts and rules for each sector,” he added. “There will be methodologies and rules for risk assessment and damage management. The experts will work according to these regulations. The representatives of the Ministry of Agriculture, Ministry of Finance, Ministry of Economy and FIMSA work together on these issues.”

“To attract independent experts, FIMSA is negotiating with the Azerbaijan State Agrarian University,” Agashirinov said. “The work is underway to create an independent expert institute for agricultural insurance.”

“The law also envisages the subsidization of insurance premiums, one part of which be paid by the farmer and the other by the state,” he added. "This also implies guarantees for reinsurance on the accumulated funds.”

“The state guarantees will be a step higher than reinsurance,” Agashirinov added. “This is a new mechanism. Thus, the problem of ensuring the protection of farmers from risks will be solved. At the same time, the burden of the state will decrease and the sustainability of agricultural production will be ensured.”

He noted, “There will be conditions for the growth of financial opportunities, the level of urbanization will decrease, and food security will be enhanced. All these advantages will be possible after implementation of the new agricultural insurance system.”