Download file with graphs >>> Throughout spring-summer 2011, the insurance companies signed 1,981 crop insurance contracts (750 contracts in 2010). Our database does not distinguish between the types of contracts for spring-autumn as these contracts were less standardised than the contracts providing coverage for the winter season.  Normally, the insurers allowed producers to select a limited coverage (i.e. selected perils). This reduces the cost of insurance, especially if the client wishes to insure only against some predetermined risks. Throughout spring-autumn 2011, 540,000 hectares were insured (340,000 in 2010). The total sum insured was nearly UAH 3.2 b. (UAH 1.6 b. in 2010). The total premiums amounted to UAH 108 million (UAH 57.7 million in 210). The average premium rate was 3.38%, i.e. somewhat lower than in 2010 (3.59%). The forward grain purchase programme of the KhlibInvestBud Company in the grain market was the major factor contributing to the development of agri-insurance. All producers participating in the programme had to insure the yield with one of the three accredited companies (ASKA, Brokbuisness or Providna). Consequently, these three companies collected over 47% of all premiums in the market in spring-autumn 2011 and insured 264,000 hectares, e.g. 49% of the total acreage insured in the 2011 season.  The average insurance rates of these companies were at the level of the market average rate. That may be seen as an indicator that KhlibInvestBud required the producers to have real insurance coverage (which is often not the case when crops are insured as collateral). According to the insurance companies, the average premium rate on bank pledged crops insured in spring-autumn 2011 was only 1.29%. The insurance companies could not provide the indemnity data for the time when the data was requested, i.e. the database does not include the indemnity and loss data. These data will be collected at later stages along with the data on winter crops insured during autumn 2012. Crop data The producers preferred to insure winter wheat (1,091 contracts), sugar beets (234 contracts), corn (192 contracts) and winter rye (122 contracts). Fruit trees and grapes were not covered at all.  It should be noted that horticulture insurance is virtually nonexistent in Ukraine. In spring 2011, very few producers purchased vegetable coverage at the rates significantly lower than the average agri-insurance rates in Ukraine. The insured acreage under winter wheat was 284,000 hectares. The producers paid over UAH 44 million under the contracts insuring winter wheat for the summer season. The corn insurance contracts covered some 69,500 hectares and provided for the premiums worth UAH 19.3 million Sugar beets were insured on 55,800 hectares and the producers collected UAH 26.8 million of premiums. The insured acreage under sunflowers was 40,000 hectares (only UAH 4.7 million collected).

The key agri-insurance data are given in the table below.

Table: Crop insurance data by crop

Crop	Contracts	Including, collateral agreements	Acreage, hectares	Insured sum, UAH	Premiums, UAH
Winter wheat	1,091	42	284,156	1,431,197,640	44,356,435
Winter barley	39	9	9,136	21,520,785	348,608
Winter rye	122	1	13,317	38,726,205	1,430,316
Winter triticale	2	2	380	1,368,360	13,478
Winter rapeseed	31	15	12,060	65,866,904	1,011,434
Wheat	6	0	1,890	9,335,331	154,280
Barley	88	1	21,078	64,027,285	3,359,356
Rye	1	0	9,854	30,765,013	1,155,223
Sugar beets	234	3	55,845	735,329,840	26,803,363
Sunflower	98	5	40,137	161,813,125	4,749,494
Rapeseed	2	0	254	1,168,146	165,877
Bea	1	0	32	70,144	905
Soya	54	1	19,615	84,895,368	3,928,492
Vegetables	1	0	11	512,050	8,193
Corn	192	4	69,490	495,640,697	19,339,792
Spring mustard	2	0	627	526,879	23,595
Tomatoes	1	0	663	18,332,454	696,633
Chick pea	2	0	22	125,104	2,551
Buck wheat	13	0	1,140	31,855,050	318,124
Rice	1	0	352	6,588,000	197,640
Total	1,981	83	540,057	3,199,664,378	108,063,789

The average premium rate for winter wheat was 3.1%. Sugar beets were insured at 3.65%, corn – at 3.9% and sunflowers – at 2.94%.  The rapeseed insurance was most expensive – the average rate for two contracts was 14.2%, however it is hardly indicative due to the low number of contacts. In spring 2011, the tomato insurance was most expensive (UAH 1,051 per hectare). It was expensive to insure rapeseed (UAH 653/hectare), rice (UAH 561/hectare) and sugar beets (UAH 480/hectare). Other key features per crop are given in the table below.

Table: Average premium rates, average insured sums, indemnities and average rates per crop

Crop	Average premium rate	Acreage hectares per contracts	Premium total, UAH per contract	Premium sum, UAH per hectare	Insured sum per hectare
Winter wheat	3.10%	260	40,657	156	5,037
Winter barley	1.62%	234	8,939	38	2,356
Winter rye	3.69%	109	11,724	107	2,908
Winter triticale	0.99%	190	6,739	35	3,600
Winter rapeseed	1.54%	389	32,627	84	5,462
Wheat	1.65%	315	25,713	82	4,939
Barley	5.25%	240	38,174	159	3,038
Rye	3.75%	9,854	1,155,223	117	3,122
Sugar beets	3.65%	239	114,544	480	13,167
Sunflower	2.94%	410	48,464	118	4,032
Rapeseed	14.20%	127	82,938	653	4,599
Bea	1.29%	32	905	28	2,192
Soya	4.63%	363	72,750	200	4,328
Vegetables	1.60%	11	8,193	745	46,550
Corn	3.90%	362	100,728	278	7,133
Spring mustard	4.48%	314	11,798	38	840
Tomatoes	3.80%	663	696,633	1051	27,660
Chick pea	2.04%	11	1,276	116	5,687
Buck wheat	1.00%	88	24,471	279	27,952
Rice	3.00%	352	197,640	561	18,716
Average	3.38%	273	54,550	200	5,925

Data by region The oblast of Poltava was the leader by the number of contracts sold in spring-autumn 2011.  Three hundred eighty two contracts were signed in Poltava oblast. The insured acreage was 96,000 hectares. The total premium amounted to UAH 34 million or 32% of the total agri-insurance premiums in Ukraine. In these oblasts the producers of sugar beets, sunflowers and corn were most likely to insure. By number of contracts, the leaders are the oblasts of Khmel’nytsk (158 contracts), Vinnytsya (146 contracts), Odessa (103 contracts), and Zhytomyr (102 contracts). In all other oblasts the number of contracts per oblast never exceeded 100. In addition to Poltava oblast, the largest insured acreages were in the oblasts of Vinnytsya (46,800 hectares), Khmel’nytsk (37,200 hectares), Kherson (36,600 hectares) and Sumy (30,600 hectares). The highest premiums were collected in the oblasts of Khmel’nytsk (UAH 11.6 million), Vinnytsya (UAH 6.9 million), Kirovograd (UAH 4.5 million) and Zhytomyr (UAH 4.5 million).

Table: agri-insurance by oblast

Oblast	Contracts	Total acreage, hectares	Sum insured, UAH	Premiums, UAH
Crimea Autonomous Republic	57	16,530	62,490,177	2,094,670
Vinnytsya	146	46,811	395,480,909	6,880,688
Volyn	32	6,314	35,441,029	950,265
Dniepropetrovsk	76	22,873	75,646,089	1,864,920
Donetsk	60	12,224	51,997,934	1,477,373
Zhytomyr	102	18,440	109,738,929	4,467,712
Zakarpattya	5	700	5,626,795	422,145
Zaporizhzhya	26	10,965	51,435,588	1,542,322
Ivano-Frankivsk	24	4,249	28,764,906	1,075,829
Kyiv	89	15,349	96,631,725	3,349,294
Kirovograd	84	29,083	144,442,608	4,500,355
Lugansk	64	13,535	41,212,761	1,155,739
Lviv	37	22,656	114,083,087	3,745,327
Mykolaiv	82	15,485	87,389,454	3,587,329
Odessa	103	19,773	139,691,985	2,558,958
Poltava	382	96,056	749,965,702	34,164,297
Rivne	34	14,497	101,459,633	2,033,981
Sumy	84	30,645	136,901,330	3,126,327
Ternopil	68	15,883	94,081,477	3,238,702
Kharkiv	73	20,608	105,712,615	3,942,607
Kherson	56	36,576	128,827,595	4,123,570
Khmel’nytsk	158	37,320	260,929,735	11,627,662
Cherkassy	54	14,957	89,768,606	2,459,782
Chernivtsi	12	1,759	6,174,076	251,604
Chernigiv	73	16,771	85,769,635	3,422,333
Total	1,981	540,057	3,199,664,378	108,063,789

 The average premium rate throughout 2011 spring-autumn was 3.38%. At the same time, only in four oblasts the average rate per oblast was over 4%. Thus in Zhytomyr oblast the average rate was 4.07% (4.1% in Mykolaiv oblast, 4,56% in Poltava oblast and 4.46% in Khmal’nytsk oblast). The lowest rates were applied in the oblasts of Vinnytsya (1.74%), Odesa (1.83%) and Rivne (2%).

The average contract insured 273 hectares. The average premium per acreage unit (hectare) was UAH 200. The lowest average premiums were paid in the oblasts of Dniepropetrovsk (UAH 82) and Lugansk (UAH 85). Agri-insurance was most costly in the oblasts of Poltava (UAH 356) and Khmel’nytsk (UAH 312). The table below illustrates the other major indicators.

Table: Agri-insurance by oblast

Oblast	Average premium rate	Acreage, hectares per contract	Premium per contract, UAH	Premium per acreage unit, UAH/hectare
Crimea Autonomous Republic	3.35%	290	36749	127
Vinnytsya	1.74%	321	47128	147
Volyn	2.68%	197	29696	151
Dniepropetrovsk	2.47%	301	24538	82
Donetsk	2.84%	204	24623	121
Zhytomyr	4.07%	181	43801	242
Zakarpattya	7.50%	140	84429	603
Zaporizhzhya	3.00%	422	59320	141
Ivano-Frankivsk	3.74%	177	44826	253
Kyiv	3.47%	172	37633	218
Kirovograd	3.12%	346	53576	155
Lugansk	2.80%	211	18058	85
Lviv	3.28%	612	101225	165
Mykolaiv	4.10%	189	43748	232
Odessa	1.83%	192	24844	129
Poltava	4.56%	251	89435	356
Rivne	2.00%	426	59823	140
Sumy	2.28%	365	37218	102
Ternopil	3.44%	234	47628	204
Kharkiv	3.73%	282	54008	191
Kherson	3.20%	653	73635	113
Khmel’nytsk	4.46%	236	73593	312
Cherkassy	2.74%	277	45552	164
Chernivtsi	4.08%	147	20967	143
Chernigiv	3.99%	230	46881	204
Average	3.38%	273	54550	200

Data by insurers According to the data provided by the insurance companies, 13 companies insured crops and perennial plantings in spring-summer 2010. The companies UESK and HDI did not provide agri-insurance in this season. Based on the available data, the insurers can be divided into three groups by number of contracts sold.  It is an important indicator of market penetration, in particular at the regional level. As a risk management tool agri-insurance is more important for small and medium producers than for big producers and agro-holdings. Some insurers that signed few contracts yet collected considerable premium amounts are included in the second group. The first group consists of the leader companies: Providna, UASK, Brokbusiness and PZU –Ukraine. Each of these companies sold over 100 contracts during the season. The company Providna signed 868 contracts (44%) to insure crops on 177,000 hectares (33% of the total acreage insured in spring-autumn 2011). The company became the leader, to a large extent, due to the participation in the KhlibInvestBud grain purchase programme. The sales volumes and acreage insured by the Providna company were nearly twice as high as those of the two other leading companies (Brokbusiness and UASK). The UASK company rates next to Providna for all major indicators except the level of premiums collected. UASK sold 470 contracts (24% of the market) to insure 106,600 hectares (20%). At the same time, this company collected the highest amount of premium – UAH 45 million or 42% of the gross premium in the sector for the season. The company Brokbuisness signed 313 contracts (16%). The company is rated third for all other indicators. It collected UAH 15 million (14%) and insured crops on 75,000 hectares (14%). The company PZU-Ukraine is in the first group. This company did not participate in the KhlibInvestBud programme, however sold 114 contracts (6% of all contracts in this season).  The company insured over 38,000 hectares (7%). The first group does not include the companies ING0-Ukraine and UNICA. Both sold few contracts (43 and 16 respectively). At the same time, both companies collected significant premiums - UAH 2.9 million (ING)-Ukraine) and UAH 4.9 million (UNICA). INGO-Ukraine insured 55,000 hectares (10% of the total insured acreage). Yet we did not include this company into the leader group for the very low average portfolio rate (0.7%).  The Company UNICA is in the second group for few contracts sold. The second group consists of the following companies: INGO-Ukraine, TAS, Oranta, ASKA and UNICA. All these companies, except UNICA, sold over 30 contracts each. The company ASKA sold 53 contracts, more than any other company in this group. This company participated in the KhlibInvestBud grain purchase programme. The Company UNICA collected UAH 4.9 million, more than any other company in the group. This company seems to prefer to insure big producers and agricultural holdings. Similar tendencies were observed with regard to the winter crop insurance in autumn 2010. The Company INGO-Ukraine insured 55,000 hectares, more than any other company in this group. The third group consists of the companies that throughout 2011 spring –summer sold less than 20 contracts each: ASKO-DS, UPSK, Oranta-Sich and Universl’na.  Each of these companies insured no less than 10,000 hectares. It is important to notice that three companies in this group applied the average rate less than 1%. The company Universl’na is the only exception (7.08%), however the volume of sales of this company was very modest.

Table: the insurers’ shares by a range of indicators

	Contracts, %	Total sum insured for the group,%	Premiums collected, %	Acreage insured, %	Premium rate per group
Market leaders	89	74	74	73	4.05%
Group II	10	23	24	25	1.54%
Group III	1	2	2	2	0.48%

In spring-autumn 2011, the average premium rate in this market was 3.38 %. This average rate was calculated by dividing the total premium collected by the sum insured. The mean value of the premium rate by company was 2.57%. Importantly, in the leader group the average rate for all (except one) companies was over 3%. PZU-Ukraine was the only exception with the average portfolio rate at 2.04%. The companies in the second group applied very different rates. For instance, the average rate for the ASKA was 3.55%, 2.99% for UNICA, 2.58% for Oranta and under 2% for the two other companies. In the third group all companies except Universl’na applied the average rate lower than 1%. These companies concentrated primarily on insuring collaterised crops or insured crops against one or very few specific risks. The major agri-insurance indicators by company are given in the table below.

Table: Aggregated data by insurance provider for spring-autumn 2011

Company	Contracts	Sum insured, UAH	Premiums, UAH	Total acreage, hectares	Average premium rate
ASKA-DS	7	9,538,566	83,026	2,100	0.87%
INGO-Ukraine	43	409,696,116	2,853,931	55,277	0.70%
UPSK	16	65,786,531	267,147	8,507	0.41%
TAS	41	86,421,252	958,933	14,711	1.11%
Провидна	868	925,779,689	34,205,405	176,851	3.69%
Providna	37	38,876,620	1,003,521	14,742	2.58%
Oranta-Sich	2	2,353,680	3,530	1,791	0.15%
PZU-Ukraine	114	82,566,626	1,686,214	38,145	2.04%
UASK	470	891,295,214	45,174,815	106,370	5.07%
Universal’na	1	250,290	17,720	103	7.08%
ASKA	53	53,659,849	1,902,554	12,069	3.55%
Brokbusiness	313	471,092,650	15,044,727	74,755	3.19%
UNICA	16	162,347,296	4,862,266	34,635	2.99%
Total	1,981	3,199,664,378	108,063,789	540,057

We could not estimate the loss ratios for spring-autumn 2011 as the insurers were not be able to submit the relevant data before the end of the year. We are planning to collect the loss data and finalise this document in the first quarter of 2012. Agri-Insurance Development Project, IFC