On October 24, the Armenian government approved the procedure for subsidizing insurance payments within the framework of the pilot agricultural risk insurance program.
Presenting the draft decision, the Minister of Economy of Armenia Tigran Khachatryan recalled that since the beginning of October insurance policies have been sold in the Ararat, Armavir, Aragatsotn, Kotayk, Vayots Dzor and Tavush regions in case of hail, and farmers from Armavir and Ararat are insured against spring frosts.
According to the Minister, the Armenian side together with the German Development Bank KfW subsidizes half of the insurance payments – in the range of 50-60%, depending on the conditions. Farmers are given the opportunity to receive compensation for the damage caused by the insured risks, on average, in the amount of 500-600 thousand drams per ha, depending on the location of the land and productivity, paying 50-60 thousand drams per policy. “All procedural issues were discussed and agreed upon with the Ministry of Finance and the Central Bank,” he said. Armenian Prime Minister Nikol Pashinyan, in turn, noted that the implementation of the agricultural insurance system addresses the issue of obtaining real compensation for the lost crop. “That is we suggest that the farmer does not wait for the hail, and then the state will pay 30 thousand drams for the lost hectare of the crop. We will pay together these 30 thousand drams for insurance in advance, and in the case of hail the farmer receives 500-600 thousand drams instead of 30 thousand drams,” the prime minister emphasized.
Earlier, ArmInfo reported that the agricultural insurance process is starting in Armenia. At the first stage, insurance covers apricot orchards and vineyards, and hail, fires, and spring frosts are defined as the risks covered by insurance. Farms from Armavir, Ararat, Aragatsotn, Tavush, Kotayk and Vayots Dzor regions will be insured against hail and fires, and farmers from Armavir and Ararat will be able to insure against spring frosts. In addition, farmers will be able to choose one of 5 insurance policies. The amount of the insurance premium will be determined on the basis of a risk assessment on a particular land plot. So far, with any insurance package, 50% of the amount of the insurance premium will be paid by the Armenian government, and with full insurance, that is, simultaneous insurance against all risks – hail, fire and frost, a 10% discount is envisaged.
The state within the framework of the agricultural insurance project will subsidize 50% of the cost of the insurance policy (against the previously called 60-65% – Ed. note). The National Agency of Agricultural Insurers (www.aina.am) has been established. For now the Agency’s partners are three companies – Ingo- Armenia, Rosgosstrakh Armenia and Sil Insurance. They specify the internal mechanisms for the further servicing of policies for this class of risks. As part of the pilot project, agricultural risks will be reinsured by a large Swiss company SwissRe. The first insurance contracts are expected to be concluded in January 2020.
The German bank KfW allocated a grant in the amount of 5.3 million euros for the implementation of the pilot program of the agricultural insurance system in Armenia. The main grant amount of 4.8 million euros was supposed to be directed exclusively to subsidizing the purchase of insurance policies by farmers. The remaining amount of 515 thousand euros went to cover the costs associated with consulting. Moreover, the Government of the Republic of Armenia represented by the Ministry of Agriculture will co-finance the program in the amount of 5 million euros. The Climate Investment Funds will also provide 2 million euros, of which 200 thousand euros will be used to subsidize the purchase of insurance policies, and 1.8 million euros – for consulting services. Consulting will be handled by a consortium of three companies. 1.9 million euros were allocated for the creation of AINA, the retraining of personnel and the formation of the institution of an appraiser, the development of by-laws and the services of a consulting company.
Source – https://finport.am