Russian experience in crop insurance and satellite monitoring of crops

Transcription

1 Russian experience in crop insurance and satellite monitoring of crops Korney Bizhdov President of National Association of Agriculture Insurers

2 Agriculture in Russia >10% of arable land of the world Crop acreage: 80 million ha 4,4 % of Russian GDP 5,2 % of Russian export ($ 17 Billion) MAIN CROPS: LIVESTOCK, HEADS: Cereals and legumes - 47 million ha Wheat 28 million ha Industrial crops - 14 million ha Sugar beat 11 million ha Oilseeds - 12 million ha Sunflower 8 million ha Cattle:19 million Swine:22 million Small cattle: 24 million Poultry: 500 million Source: Rosstat 2

3 NAAI Non-profit professional association of agroinsurers Established in 2007 AIAG member since 2014 NAAI consists of 23 insurers Acts in compliance with the Federal Law on State Supported Agricultural Insurance since 2012 Only members of NAAI could participate in the statesupported program since

4 NAAI main responsibilities are defined by the Federal Law on State-Supported Agroinsurance To develop Standards of professional activity Approved by the Central Bank of Russia To develop consolidated Rules of insurance Approved by the Ministry of Agriculture, the Ministry of Finance, the Central Bank of Russia To control members compliance with the standards and rules of professional activity To form and operate a compensation fund for cases of an agroinsurer s bankruptcy To suggest the Ministry of Agriculture with The Annual Insurance Plan The Methods for calculating insured value and claims To collect and publish agroinsurance statistics 4

5 NAAI Programs for Agricultural Insurance Development The programs could be partly financed by the 25 % of income from investing compensation fund s assets upon approval from the Ministry of Agriculture, the Ministry of Finance and the Central Bank of Russia in accordance with Federal Law Insurance Programs Proposals for the improvement of existing statesupported insurance programs Development and testing of new programs: indices, micro-insurance, etc. Financial Literacy Regional seminars for farmers and governmental bodies Educational materials Risk Office Identification of risk areas Modeling and prediction of risks Improving the accuracy of risks tariffication Improving the quality of risk management Satellite Monitoring Clear and objective data on the crops condition Reducing the cost of inspections 5

6 Agriculture Insurance Stages of Development of State-Support USSR : Compulsory insurance of crops and livestock Monopoly of the state insurance company Without subsidies 1993: First attempts of the government to support agroinsurance : Support is regulated by Government Orders 2010: Catastrophic drought resulted in: emergency situations in 43 territorial entities of Russia over 41 billion roubles of direct losses : Federal Law on state-supported agroinsurance came into force Mandatory franchise for crops set at 30 % Farmers pay only 50 % of the premium Compensation fund is formed for cases of an agroinsurer s bankruptcy 2013: Launching state support for livestock insurance Changes in conditions 2015: Lowering franchise for crops down to 25 % 2015: Additional insured perils 2016 Introduction of consolidated standards and rules of agroinsurance Lowering franchise for crops down to 20 % 2017 Changes in core principals of subsidising The support of agroinsurance is in the framework of the consolidated subsidy, which combines subsidies for different programs in agriculture 6

7 Agricultural Insurance Main Principles of the Current State-Supported Program Supported insurance programs are Crop and Perennial plants insurance Livestock insurance (since 2013) Voluntary insurance Main conditions are set by Federal Law Premium subsidies are 50 % of the insurance premium Insurer must be a member of NAAI 80 % of the insurance premium forms reserves (75 %) and compensation fund (5 %) 7

8 Agriculture Insurance Premiums (Crop + Livestock) (Billion RUB) 9,8 +65 % 16,2-18 % 2,6 2,2 2,0 10,7 12,2 15,0 +25 % 2010* 2011* Before the Federal Law On State Supported Agroinsurance came into force 2010 catastrophic drought 2012 new conditions in the (uninsured loss over 41 Bln RUB) state-support for agroinsurance Boost demand for agroinsurance Federal Law On State-Supported Accelerate changes in the statesupport legislation Tariffs are lowered about 50 % Agroinsurance came into force (from average 10,1 % in 2011 to 5,5 % in 2012) 1,3 8,7-53 % 1,2 8,8 Non-Subsidised State-Supported new policy on insurers financial stability Withdrawal of some financially unstable agroinsurers Source: the Central Bank of Russia; Crop and Livestock insurance combined; * State-Supported and Non-Subsidised combined 8

9 Crop Insurance Main Conditions Main conditions of the state-support Insurance event Loss of Yield exceeding (franchise): (25 % in 2015, 30 % till 2015) 20 % of 5-year average Deductibles 0-30 % of Sum Insured (up to 40 % before 2015) Sum Insured % of Insured Value 15% 3% 3% Deductible (by number of insured objects) 79% Methods for calculating insured values and losses are set by the Ministry of Agriculture 0-5% 10-15% 20-25% 30-40% Source: NAAI 9

10 Crop Insurance Insured Objects Objects insurable with State-support Premium (%) Governed by the Law 18% Includes 14 groups of crops cereal, beans, oilseeds, technical, forage, melons, potato, vegetables, grape, fruits, berries, nuts, hop, tea Groups of crops could be specified 3% 4% 6% 7% 8% 10% 12% 32% by the Ministry of Agriculture in the Annual Insurance Plan Insurance Plan of 2017 includes all groups and over 100 species Source: NAAI Winter Wheat Sunflower Sugar Beet Spring Barley Spring Wheat Corn Forage crops Soy Other 10

11 Crop Insurance Insured Risks Perils Insured with State-support Indemnity Paid (%) Governed by the Law Includes 8% 5% 4% 3% 25% Natural hazards (21 phenomena): drought, winter kill, frost, hail, waterlogging, hurricane, earthquake, natural fire, flooding, etc. Epiphytotic spread of noxious organisms 11% 19% 24% Electricity, heat or water supply breakdowns due to natural hazards (only for irrigated crops and greenhouses) Soil Drought Dry wind Winterkill Hail Atmospheric Drought Excessive soil moisture Frost Other Source: NAAI 11

12 Agriculture Insurance Subsidies & State-Supported Insurance Penetration Subsidies (Billion RUB) Average subsidies in ,7 0,4 billion Rub for crops billion Rub for livestock Subsidies declined by half in 2016 Crop Insurance Penetration* (% of Crop Land) 18,5% 17,7% 16,3% 12,5% 12,5% 10,9% 4, ,4 5,0 0,3 0, ,0 0, % 2,5 0, ,9 11,7 12, Area Insured (Million ha) 8, , ,0% Insured Share (%) Target Share (%) Source: the Ministry of Agriculture * Only policies with paid subsidies 12

13 40% Crop Insurance in NAAI Premiums and Payments 23,1 25,4 25,0 27,6 2, , % 1,6 7, ,9 10% Indemnity Ratio (%) 0,7 1, % 4, Premium Indemnitiy Paid Favorable weather conditions since 2012 average cereals yield has increased by 43 % 1,0 7,3 14% (Billion RUB) 19, Cereals Yield (c/ha) number of regions with declared emergencies has decreased by almost 50 % 14 Regions with Declared Emergencies 11 Source: NAAI, Rosstat, the Ministry of Agriculture 13

14 NAAI Satellite Monitoring for Members All NAAI members have access to satellite monitoring since 2016 Insurers analyse crop conditions using satellite images and weather data Insurers can monitor crop performance, identify risk areas, target scouting efforts and etc. NAAI members have tested mobile app for loss adjusters since 2017 Objective Relatively inexpensive Makes loss settlement transparent Reduces costs of policy monitoring 14

15 Satellite Monitoring Loss Adjustment Example Analysis of the field affected by hail using NDVI The impact of hail is confirmed by the decrease of NDVI in some areas of the field Affected area: % of the field Unaffected area Affected area 15

16 Satellite Monitoring Mobile app for Loss adjusters Optimal route of inspection based on NDVI maps Time and GPS-stamping of all actions Loss Adjustment Report with video and photo 16

17 Development of Agricultural Insurance NAAI is developing strategy for agroinsurance collectively with the associations of agricultural producers Strategy is discussed with the Ministry of agriculture, Ministry of Finance, Central Bank of Russia, the State Duma and the Federation Council Strategy includes Optimisation of subsidising process Increasing of flexibility of state-supported program Wider usage of satellite monitoring, including additional services to farmers 17

18 Thank you! Grazie per l attenzione! Phone / Fax: Rome, Italy 2-3 November 2017