Agricultural Insurance in Latin America & the Caribbean (LAC).

Transcription

1 1 Agricultural Insurance in Latin America & the Caribbean (LAC). Ramiro Iturrioz Senior Agriculture Insurance Specialist, World Bank Diego Arias Senior Agriculture Insurance Specialist, World Bank Third Annual Symposium For Facilitating The Development of Agricultural Insurance in the Americas Washington Dc, February 2012

2 2 Agricultural Insurance. Global situation as of 2011 Geographic Distribution of Agricultural Insurance Premiums Europe, US$ 4.0 billion (16%) Premium Distribution per Type of Product Bloodstock 2% Livestock 4% Named Perils 10% Aquacultur e. 1% Greenhouse 1% Forestry 1% USA & Canada, US$ 13.6 billion (56%) Asia, US$ 5.6 billion (23%) Africa, US$ 180 million (0,7%) MPCI 77% LAC, US$ 770 million (3%) Aus & NZ, US$ 160 million (0.7%) 25.0 Agriculture Insurance Premiums Evolution (US$ billions) 24.0 Estimated Agricultural Insurance Premiums: US$ 24 billons Increase on Agricultural Insurance total Premiums written : Increase on the premium volume in the US market China, 2nd biggest market (33% Average Growth Rate) USA / China/ Canada account for 71% of the total premiums BRIC countries accounts for 19% of the total Premiums Increase of the weight of MPCI in the product portfolio

3 3 Agricultural Insurance availability in LAC Premium Distribution per Type of Product Livestock 3.1% Aquaculture Forestry 2.8% 2.6% Bloodstock 0.1% Catastrophe Insurance 13.3% MPCI 42.5% Named Perils 35.6% Agricultural Insurance is available in 18 /25 countries with agricultural basis in LAC. 77 insurance companies are actually offering agricultural insurance in the region Main products are MPCI and named perils. Catastrophe insurance purchased by Governments is also under a strong consolidation process in the region Source: Updated from (Iturrioz R & Arias D ) and market information

4 4 LAC: Agricultural Insurance Premiums for 2010 (estimated) 800 LAC: Agricultural Insurance written Premiums (US$ millions) US$ 230 MM. US$ 4.7 MM. v US$ 1 MM. US$ 1.8 MM. US$ 0.2 MM. US$ 0.06 MM. US$ 1 MM. US$ 0.5MM. US$ 3.7 MM. US$ 9.00 MM. v US$ 0.4 MM US$ 2 MM US$ 14 MM. US$ 38 MM. US$ 229MM. US$ 0.02 MM. US$ 12 MM. US$ 201 MM. US$ 25 MM. Premium Volume: US$ 773 millons Premiums are distributed unevenly Brazil, Argentina and México = 85% of the written premiums Reduction d of the Market Growth Rate. Brazil because of Government reductions on the budget for agricultural insurance premium subsidies. Argentina due to increase on sales México because of increase in Government purchases of Catastrophe insurance Colombia, Ecuador, and Dominican Republic Source: Updated from (Iturrioz R & Arias D ) and market information

5 5 LAC: Public Sector Support to Agricultural Insurance US$ 138 MM US$ 0.5 MM US$ 5.4 MM US$ 1,1 MM US$ 2 MM % LAC: Evolution of the total Agricultural Insurance Premium per source of fiancement (US$ millions) 39% Private Sector 38% Premium Subsidies Catastrophic Insurance Premiums 18% 20% 27% 34% % 40% 35% 30% 25% 20% 15% 10% 5% 0% US$ 14 MM Observed mechanism of Public Sector Support to agricultual insurance. US$ 122 MM Different mechanism for public support to agricultural insurance coexist in the region. Product Research and Development Legal & Regulatory Framework Agricultural Insurance Premium Subsidies Public Sector Reinsurer The total public expenditures on agricultural insurance in LAC amount to US$ 297 million accounting for 38% of the total premiums. Provision of Catastrophe Reinsurance US$ 3.5 MM US$ 5 MM US$ 2 MM Brazil and México accounts for 87% of the total public expenditures in LAC. Agricultural g insurance premium volumes are greatly reliant on the levels of public sector support to agricultural insurance. Source: Updated from (Iturrioz R & Arias D ) and market information

6 6 LAC: Agricultural Insurance Penetration 1.0% Agricultural Insurance Penetration in LAC and comparisson with other regions in the World (Agriculture GDP ) Europe: 0.98% 0.8% Australia/NZ: 0.68% 0.6% Asia: 0,55% Agricultural Insruance Penetration > 80% 70% -79.9% 60% % 0.4% 0.2% 0.0% LAC: 0,37% Africa: 0,079% 50% % 40% % 30% % 20% % 10% % 1% - 9.9% 0.1% - 0.9% Crop Insurance Forestry Insurance Agricultural Insurance penetration in LAC: 17% of the crop area is insured. 19% of the forested area is insured. 1,3% of the livestock is insured 28% of aquaculture production is insured Uneven Penetration of Agricultural Insurance. Ag Ins. Premiums/ Ag. GDP=0,37% Livestock Insurance Aquaculture Insruance Source: Updated from (Iturrioz R & Arias D ) and (Mahul & Stutley, 2010)

7 7 LAC: Agricultural Insurance Penetration Source: (Iturrioz R & Arias D ) Consolidated Areas Approx million insured hectares. Approx. 50% of the crop area is insured. Written premiums amounting to US$ 600 million Main insured crops: Cereals, oilseeds, and Fruits. Main types of insurance: Hail and MPCI. Areas on process of development Approx. 4 million insured hectares Approx. 8% of the crop area is insured. Written premiums amounting to US$ 80 million Main types of insurance is MPCI. Areas where agricultural insurance is not consolidated d Approx. 9 MM million insured hectares.. Approx. 4% of the crop area is insured. Written premiums amounting to US$ 60 million Main types of insurance: MPCI and Catastrophe Insurance. Areas where agriculture insurance is not yet offered Approx. 50 million hectares. Predominance of Small farmer enterprises Farmers scattered distributed throughout huge extensions and/or in places with difficult access. Lack of Services and Distribution Channels Areas with exposure to Catastrophic events.

8 The World Bank provides technical assistance to countries in the development of agricultural risk management solutions The WB s Agriculture Insurance activities are focused in countries and agriculture production clusters that are not attended by the commercial insurance sector. Agriculture Risk Management and Insurance Public Policy development Dominican Republic, Guyana, Jamaica. Assessment of the operational, technical, financial, and institutional framework of Agricultural l Insurance Schemes México Development of Innovative risk transfer mechanism for specific agricultural clusters Livestock producers in Uruguay Livestock producers in Buenos Aires Argentina Coffee Farmers in Jamaica. Agriculture Value Chain Risk Assessments. Guyana, Honduras, and Colombia Development of Public Goods to promote agricultural Insurance in the Region. FIDES World Bank agreement. Peru, Colombia, Honduras, and México Knowledge Management and knowledge sharing. 8

9 9 Take aways Agricultural Insurance is available in most of the countries in the region The market is quite well developed in terms of premiums and products Public sector has an important role in supporting agricultural insurance in LAC Agriculture insurance penetration is uneven and far away to be optimal. Growth opportunities : Development of tailored made product and coverage for the commercial farming sector. Develop an approach to the risk transfer needs of the agribusiness value chain Explore alternatives ti on catastrophe t insurance / sovereign risk transfer. Challenges ahead: What if Governments decide to reduce the budget to support agriculture insurance? Need for am improvement on the infrastructure, human resources and technology employed by the industry to join the market growth Reduction on the transaction cost involved in the provision of agricultural insurance. The WB focus its activities on agricultural risk management on those countries or agriculture clusters s that are not receiving ing services from commercial cial insurers s

10 10 Thank-you!!

11 11 Additional Materials Agricultural Insurance in Latin America Iturrioz R. & Arias D Government Support to Agriculture Insurance Mahul O. & Stutley C ALSECTOR/Resources/Agricultural_insuranc e_in_lac_web_final.pdf ALSECTOR/Resources/CountryOverviewMast erpiece_final_annex_e.pdf