Insurance a case of trial and error

Agricultural insurance incurred  many failures in the past. As a result, its trial application, which started from July 1, 2011 in 21 provinces and cities in light of the Decision 315/2011/QD-TTg dated March 1, 2011, will put great pressure on both the government and insurers.

“We came up with rice plant insurance in the early 1980s in northern Nam Dinh province. However, our efforts ended in vain due to poor awareness about the product among farmers,” said Vietnam National Reinsurance Joint Stock Corporation chairman Trinh Quang Tuyen.

Tuyen said it was important to clarify associated risks, insurance areas and compensation footing to ensure agricultural insurance successful trial.

“Reinsurance is an area of prime concerns by insurance firms when it comes to agricultural insurance,” said Bao Minh Dak Lak deputy director Tran Quoc Phuc.

Phuc assumed agricultural insurance was a risk-prone area, without support from reinsurers, insurance firms would be unwilling to offer the service. However, the Decision 315/2011/QD-TTg and its guiding draft circular only cover insurance premium support to farmers but not yet mention reinsurance.

For agricultural insurance to come with success, Phuc said the state had better assist farmers with premium support in around five years, enact relevant legal documents to ease businesses’ implementation and separate insurance premium payment from that of conventional insurance products.

Deputy head of Agricultural Insurance Department at state-owned leading insurer Bao Viet Group Hoang Xuan Dieu assumed firms needed to be discreet in tailoring agricultural insurance products and avoid offering ‘massive-style’ insurance like ‘insuring all risks to all people’.

Local governments worry that without clear regulations regulating farmers’ and insurance firms’ obligations, agricultural insurance would face failure again if the government’s support stopped.

In this respect, deputy minister of Agriculture and Rural Development Ho Xuan Hung said business community support would be important parallel to farmers’ premium payments to empower agricultural insurance financial sources.

According to Hung, agricultural insurance was a big state policy, which benefits needy people, agricultural businesses and insurance firms as well. Under current regulations, needy people have 100 per cent of their insurance premiums paid by the state, the support level was 80 per cent for poor people and 60 per cent for other sorts of agricultural insurance participants.