As its proponents hoped, crop insurance has become the largest single source of financial protection to farmers. From insuring 182.2 million acres in 1997, the program has grown to cover more than 264.6 million acres, a slight drop from the 272.7 million acres in crop year 2008. According to National Crop Insurance Services, the program is meeting the Congressional mandate of insuring 80 percent of insurable farmland.There are two kinds of crop insurance: crop-hail, which is provided by the private sector, and multiple peril, an all-risk coverage underwritten by the private sector and the federal government and serviced mostly by the private sector.
Reinsurers are playing often a key role in developing new agricultural insurance markets. In agriculture, finance of inputs and lending for crop inputs is very often linked to the availability of crop insurance and hence reinsurance. Being in the financial service industry Partner Re sees its role in providing risk capital for risk transfer with all the financial services that go along with that process. For Partner Re the sector of agriculture insurance has been defined clearly as a main strategic target.
Agricultural insurance plays an important role in stimulating investment in agriculture and in stabilising farmers’ income. In a Focus Report titled: Setting up sustainable agricultural insurance: the example of China, released today, Swiss Re suggests that China’s experience with agricultural insurance subsidies could point the way for other emerging markets to drive growth and secure food supply. The report also recommends that all stakeholders in the agricultural insurance sector collaborate to ensure risk-adequate pricing and to develop viable risk assessment procedures and solutions for local markets.
The rising impact of natural diasters is driving up the cost of disaster relief and reconstruction for the public sector, especially in developing countries where insurance penetration is still low. Swiss Re’s focus report “Disaster risk financing: reducing the burden on public budgets” shows how recent risk transfer solutions offer governments, development banks and relief organisations models to access pre-event financing, and enable them to allocate relief funds more efficiently by using insurance and capital market instruments.
According to the latest Swiss Re sigma study, world insurance premium income grew 3.3% in real terms in 2007, reaching USD 4 061bn. This growth was primarily driven by the life business in industrialised and emerging markets and to a lesser extent by the non-life business in the emerging markets. Life insurance premiums increased 5.4%, which is above the previous ten year average. Non-life premium growth was robust in the emerging markets (+10%), but decreased in the industrialised countries (-0.3%). However, both the life and non-life industries are financially sound despite the challenging economic environment.
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