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July 2013

Munich Re Agro Insurance Info

Agricultural insurance systems need good implementation

Dear Reader,
Agriculture insurance experts worldwide are working steadily to implement or improve the conditions needed for a sound risk management tool for farmers. Munich Re Agro Insurance Info will keep you posted on the main developments.

Latin America: Experts recommend a guide to implement a successful agriculture insurance system

February 2013. Every year, experts in Latin American insurance and reinsurance have accepted the invitation of IICA (Instituto Interamericano de Cooperación para la Agricultura) to discuss the challenges of implementing agricultural insurance systems.

The measure of success is the widespread accessibility of the risk management tool for farmers, that they understand its functionality, can afford the premiums and benefit from a contracted indemnification in order to increase investments in productivity.

Supported by a group of international consultants, insurers and reinsurers, IICA assembled and presented a comprehensive documentation for practitioners. For the first time, multilateral experts developed a best-practice implementation guideline. The objective of this publication is to improve the knowledge of risk management and risk reduction, to analyse the regional agricultural risk profiles and to indicate possible solution strategies. As the publication resolves numerous facets of farmers' risk management, the key success factor for implementation is to employ all stakeholders, including the public sector.

Download the press release and publication

Italy: Italian Agriculture Minister hosts a convention on the future of agriculture insurance and seeks comments from the insurance industry

January 2013. As patron of the 5th National Convention on agriculture insurance, the Italian Minister for Agriculture (Mario Catania) was concerned with the future stability of agriculture production. The convention was conducted by Ce.S.A.R (Center for Development of Agriculture and Rural Areas) together with the University of Perugia (Facoltà di Agraria) and ASNACODI, association of the agriculture risk management consortiums. Participants discussed, within the framework of the new CAP (EU Common Agriculture Policy) and the National Agricultural Insurance Plan 2013, how to achieve a stable revenue in agricultural production in the wake of climate change.

According to the meteorologist Marina Baldi, climate change increases the exposure of crops in Italy especially in respect of spring frost, drought and excessive rain. The insurance industry carried above average insurance losses in the past year because of drought and frost. A major problem for the risk takers is the drastic decrease in direct insurance rates in the last 10 years and the inclusion of more and more insured perils without reliable data and the necessary technical expertise.

The new Agricultural Insurance Plan, which defines yearly the parameters for state-subsidised crop insurance, does not correct these deficiencies. Therefore, reinsurers offered a negative outlook and commented that reinsurance covers will be more scarce and expensive for the Italian crop insurance market in future if no substantial changes to the system are made.

Learn more about this event and find the respective presentations

Russia: Agriculture insurance was the main issue at the Munich Re conference "Climate Change: Risks and Opportunities for Russia. The challenge for the insurance industry"

April 2013. More than 70 participants from various Russian sectors such as politics, banking, science, insurance and reinsurance discussed current aspects of climate change, the consequences for Russia's economy, including agriculture, and what the insurance industry can offer.

Both Peter Hoeppe, Head of Munich Re's Corporate Climate Centre, and Alexander Kleschenko, Director of the All-Russian Research Institute of Agricultural Meteorology, a Federal State institution, demonstrated the risks and opportunities and concluded that the Black Sea region, today's breadbasket, will suffer up to a 5% yield decrease in cereals by 2030, assuming a constant and comparably low productivity level.

Picking up on that outlook, Karl Murr, Head of the Agro Division at Munich Re, demonstrated how a comprehensive agricultural insurance system can ease the impact of climate change on investments in agriculture. He welcomed the efforts of the Russian Federation on strong financial support in premiums. However, he stipulated the need for further public and private commitments towards more specialisation in order to be better prepared for the needs of farmers in case of catastrophes. The Deputy Minister of Agriculture, Dmitry Vladimirovich Yuriev, confirmed the ongoing strong state engagement in the agriculture insurance system and expressed the need for additional support in favour of the farmers. Both Yuriev and Murr concluded that the only way to stabilise crop insurance in Russia is to further develop the existing public-private partnership (PPP) system.

One issue of many that Russia also has to consider in a PPP system was discussed in June at another meeting on WTO compliance. The Agriculture Ministry gained an insight into worldwide practice for agriculture subsidies in the light of WTO requirements. Depending on its definition, other WTO countries include agriculture insurance subsidies under either the green or the amber box.

Upcoming: AIAG (International Association of Agricultural Production Insurers) Congress in Vienna

The AIAG congress from 29th September to 2nd October 2013 in Vienna, Austria, is dedicated to the general theme "Agricultural Insurance and Information Management for Today and Tomorrow". In the keynote speech, Munich Re will introduce this topic for the participants, all AIAG members such as insurers, reinsurers and other associated persons.

Read more here

If you wish to send us comments, please do not hesitate to contact us via the contact button. Please also let us know if you would like to receive this information in your preferred language (Spanish, Portuguese, Russian, German) rather than in English. Please send your replies to the Munich Re Agro Team.

SystemAgro@munichre.com

We hope you have enjoyed this issue of Munich Re Agro Insurance Info Worldwide,

Your Munich Re Agro team

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