Russia has expressed readiness to share its experience in the field of agricultural insurance with Azerbaijan.This remark was made by Kornei Bizhdov, the president of the Russian National Union of Agricultural Insurers, at the 6th Azerbaijan International Insurance Forum (AIIF-2015) last week."Azerbaijan and Russia have much in common: history and culture, energy and agrarian power of the economy. The profile of our economies is also similar. We are confident that the experience we have accumulated in the area of agricultural insurance may be of interest to Azerbaijan," he said.He noted the main problems for a country with an emerging economy hoping to apply agricultural insurance are the lack of information or the lack of quality of statistical data, a brief history of insurance and underdeveloped infrastructure.Bizhdov said that agricultural insurance is voluntary in Russia."Insurance of all livestock or the total arable lands is mandatory. We insure 85 plant and 26 animal species," he added.Referring to the National Union of Agricultural Insurers, he noted the union includes 21 insurance companies, which cover 95 percent of the agricultural insurance market of the Russian Federation."Few people know that agricultural production comprises one of the major items of export of Russia.Supply of these products exceeds arms exports by volume. We annually supply agricultural products of 20 billion rubles abroad, which almost comprises half of gas export revenues," Bizhdov noted.Azerbaijan is interested in developing agricultural insurance policies, which could provide support to farmers and spur further development of the agrarian industry. The government also seeks to attract international experts to help develop the laws on agricultural insurance.The Finance Ministry of the country has already begun to draft a bill on state support for agricultural insurance in conjunction with the Agriculture Ministry. Following its approval by the government, it will be submitted for discussion to the parliament.Currently, the government provides subsidies for agricultural insurance, but their coverage is very small.The share of public financing for agricultural insurance premiums was increased from 25 to 50 percent, according to the amendments on the law on the assistance and development of agriculture in Azerbaijan, approved in the summer of 2007.Wheat, barley, maize, sunflower, potato, sugar beet and vegetables were added to the list of agricultural crops insured by the funds of the state budget.The average tariff on agricultural insurance in Azerbaijan amounts to around 1,500 ($1,428) manats per year (five percent per hectare), while the average profit per hectare is about 25,000 manats ($23,801) per year.Each year Azerbaijan's officials in charge of the state budget determine the funds with respect to covering 50-percent of the cost of all insurance contracts with farmers. Unfortunately, it is almost never used to its full capacity.Experts believe one of the causes for the underdevelopment of agricultural insurance in Azerbaijan is the lack of awareness among farmers about the insurance and its capacity.

According to the State Insurance Supervision Service under the Finance Ministry, in January-May 2015 insurance fees for agricultural products totaled 204.23 manat ($194,438), while livestock insurance was at 1.2 million manat ($1,142 million). The share of agricultural insurance of the total fees is 0.65 percent.The potential for the Azerbaijani agricultural insurance market is an estimated 100 million manats (about $127 million). The market could grow by at least 20-30 percent after the new law on the insurance of agriculture is passed.

Source - http://www.azernews.az/