agriculture insurance in croatia 2011

8/13/2019 Agriculture Insurance in Croatia 2011

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Annex 27. Fact Sheet Croatia

1. IntroductionThe market failures of agricultural risk sharing instruments in transition economies like

Croatia restrict the potential for efficient risk management and consequently generate a

highly uncertain business environment. Apart from hail insurance, other forms of agricultural

insurance products and hedging instruments are of limited supply. Additionally, risk and low

profitability often constrain external funds inflows resulting in fewer investments and

deteriorating the farms income stability and competitiveness.

Agricultural insurance is a relatively unimportant or neglected! risk management tool in

Croatian agriculture. According to some data, not more then "# of agricultural land or of theproduction on that land! is insured. About "$# of the area is under industrial crops, oil rape,

soy, sugar beet, sunflower and similar! is insured. %t is followed by grain &'#!. %n permanent

crops taking into account only modern types of orchards! and vineyard insurance, coverage

is about &$#. %nsurance coverage as the ratio between number of insured animals and

statistically recorded shows that in the case of cattle and pigs the ratio is about &"# while in

the case of poultry it reaches about ("#.

According to the Croatian )inancial *ervices *upervisory Agency +A)A! data average

annual gross premium period ($$$-($$'! in crop insurance was & million kunas. The

average damages were '' million kunas. /ross premium in livestock production was (&million kunas whileaverage damages were &0. million kunas. Together crop and livestock

insurance had a share of only (# year ($$'! in the group 1property insurance2 and about

&3# in the sub-group 1other property insurance2.

4amages caused by natural disasters by and large mostly affect agricultural productions.

The following data also advocates for a greater importance and use of agricultural insurance.

Average annual damages losses! in the last two decades caused by metrological and

hydrological occurrence like drought, hail, frost, floods and similar were (' million 5*6.

About 7$# of losses were caused directly while indirect losses were caused by atypical

events such as forest fires, glides, plant and animal epidemics and some technical andtechnological accidents. They are also responsible for the death of fifteen people annually on

average 8eteorological and +ydrological *ervice of Croatia!. %n order of importance the

causes of damage were droughts "7#, storms and hail ($#, earthquakes &(#, frost 7#,

floods 3#, fires 3#, other (# and combinations 9# period &007-($$$, 8eteorological and

+ydrological *ervice of Croatia!.

%n order to enhance farmers participation in the insurance programs, the government

subsidi:es the insurance premium. %t started in the year ($$". /overnment subsidies caused

lower levels of public authority like the county and municipality to subsidi:e premiums for

agricultural insurance. *uch measures make agricultural insurance more affordable forfarmers and influenced higher participation from their side.

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Croatia has three different climate types due to its interesting geographical position, which

results in a wildlife diversity, as well as various livelihood and economical conditions. The

central part of Croatia has a typical continental climate. The 8editerranean climate prevails

on the Adriatic cost and partly further in the hinterland. This is the area of horticultural

production like vineyards and olive trees, vegetables and fruit growing peach, figs, sour

cherries, etc!. *outh 4almatia, in valleyofthe eretva river, tangerines and kiwis are grown.

The mountain area of Croatia spreads from Dika and /orski @otar to the 4inara 8ountain.

;eside wood and timber industry, sheep farming exists. Crop production is limited to the so-

called @arst fields,

According to the latest Eopulation Census ($$& the total population of Croatia was

','"3,'9$.

Table 1: Croatia- economic indicators

($$" ($$' ($$

Area square km! 9,"7 9,"7 9,"7

Eopulation million! ',''( ','"0 ','"0

/4E million +>@, current prices! &07,'(( (&(,7(3 ((0,$"&

/4E million B5>, current prices!a

(9,("' (7,"0 "$,0'0

/4E per capita in B5>! ,0$9 9,"03 9,03(

/4E - year-on-year rate of growth in #, constant prices! ," ",7 ',"

Average year-on-year inflation rate b &,7 (,& ","

Bxports of goods and services as of # /4E!c

$,& $,& '0,'

%mports of goods and services as of # /4E!c

3,0 3 9,'

Bxternal debt million B5>, end of year!d

&0,7&& ((,37& (,'&

Bxternal debt as of # /4E! 3, 7$,( 7(,

Bxternal debt as of # exports of goods and services! &$,7 &9$ &93

ational currencyF Croatian kuna +>@!

Bxchange rate on "& 4ecember +>@F & B5>! 3,9'90 3,93&( 3,"39

Average exchange rate +>@F & B5>! 3,9"' 3,'0( 3,'$$(

5nemployment rate %D


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*ourcesF Croatian ;ureau of *tatistics, 8inistry of )inance of the >epublic of Croatia and Croatian

ational ;ank

The croatian territory is administratively divided into counties. Bach county is an

administrative and political unit that comprises several cities and municipalities. Croatia has

(& counties including Hagreb with a special status!, &(& cities and '(( municipalities.

*ome of the main economic indicators for the period ($$"-($$ are presented in table &.

2.1. Ariculture in Croatia

Agricultural production is a very important sector of the Croatian economy. Agriculture is,

however,confronted with a large number of problems caused both by external factors such

as war damage, high levels of imports of agricultural products, an inefficient market system,

restrictive taxes and internal factors like an unfavourable educational and age structure of

farmers and poor managerial skills.Today the ma=ority of the Croatian agricultural holdings are characteri:ed by small and

fragmented land, which is a ma=or limiting factor to the increase of their competitiveness.

Croatia is marked by various geographical and climate regions that favours a diverse

agricultural production with a wide range of products. evertheless, during the &00$s,

agricultural production decreased significantly due to the war and transition to a market

economy. Elant production has been increasing continually since &00, but cattle production

is still "$# lower than in &00$.

Table 2: !asic indicators in the Aricultural Census 2""# $1 %une 2""#&

Total Agricultural

households

;usiness

entities

umber of units ''0,709.$$ ''7,"(.$$ &,"9'.$$

5tili:ed agricultural land, ha &,$33,'$".$$ 79$,&0.$$ (&3,($7.$$

Average number of hectares of utili:ed

agricultural land

Average number of hectares of utili:ed

agricultural land for units using more than & ha

(.'$ &.0$ &0.($

'.'$ ".$ &93.0$

umber of bovine animals, total '77,9'9.$$ "07,$"3.$$ 0$,9$0.$$

umber of pigs, total &,0(',93(.$$ &,3(9,70.$$ &03,333.$$

umber of sheep, total 397,&7(.$$ 3$,733.$$ &3,"$.$$

umber of goats, total ($",030.$$ ($","'$.$$ 9"0.$$

umber of poultry, total &,070,"9.$$ &$,'33,&'.$$ ,&&,7&.$$

*ourceF Agricultural Census ($$"- Croatian bureau of *tatistics

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Croatia has a total of ".& million hectares of agricultural land. About ( million hectares of the

total are arable land while the rest consists of pastures, moors, reeds and fish farms. Arable

land and gardens prevails in the agricultural land structure with a share of '9.'#. %t is

followed by pastures "9.9#!, meadows &(.0#!, orchards (.(#! and vineyards &.0#!.

?ith about 7(# of the cultivated land and in a slightly more than 7$# of livestock land,

private ownerships dominate.

The ($$" Census of Agriculture indicates that the total agricultural land was &.$3 million

hectares out of which 7'# was in the ownership of family holdings. The remaining &9# was

in possession of legal business entities, partly privately owned, partly state owned.

Elant production is one of the most important sectors of agriculture in terms of land use, food

and fodder production, /rains and oil-crops representing the main cultures in Croatia.

Iegetables are grown on ($$ thousand ha about &$# of all arable land and gardens! which

is insufficient with respect to the needs and potentials. The most important vegetable crops

are potato, cabbage, tomato, onion, peppers, cucumber, salad, and carrot. %n the production

structure potatoes covered almost half of the vegetable production surface 9",$$$ ha!.

Eroduction in greenhouses is not significant.


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Divestock production in the >epublic of Croatia is a particularly important branch of

agriculture in which many producers are involved. *mall production units, especially in cattle

and swine production as well as in sheep, goat and horse keeping are dominant. %n poultry

production, big production units having special large-scale production of poultry meat andeggs are the norm. Cattle production is Croatias main branch of livestock breeding and one

of the most important branches of overall agricultural production. The ownership structure is

dominated by family holdings in terms of the number of cattle, particularly cows and pregnant

heifers.

Croatia has a long-standing tradition in pork production. This segment is organi:ed mostly at

small production units, on family farms, within the activities of the mixed family holdings. ot

many farms are speciali:ed production units with up-to-date technologies and standard

compliant some family farms and big farms of legal entities!.

8ost of poultry production as a livestock segment employs high production technologies and

is self-sustainable. The production is organi:ed in big production units of few producers who

sometimes cooperate with speciali:ed family farms, especially for poultry meat production.

*elf- sufficiency estimation is a common global indicator, which shows the level in which the

national production satisfies the national market needs. *elf-sufficiency analyses shows

deficiencies of the most important agricultural products, especially in the case of mutton,

pork, beef, milk, vegetables and fruit. *urplus is evident in the case of wheat, sugar, mai:e,

wine and eggs.

Croatian agriculture is at a very critical point where it will decide about its future direction. %t

should be mentioned that B5 pre-accession funds and other measures designed in order to

improve farm competitiveness are questionable in the current state of risk management and

risk sharing markets.

#. +eneral Frame,or

#.1. eal frame,or of the insurance maret in Croatia

?ith the aim of establishing market relations, the >epublic of Croatia has brought the first

%nsurance Act at the beginning of &00', which has been updated several times in recent

years by the amendment published at the beginning of &003, at the end of &000 and at the

beginning of ($$&. The newest %nsurance Act was brought in 4ecember ($$.

5nder this law, insurance company management boards must have at least two members,

and at least one member must have residence in the >epublic of Croatia.

The new %nsurance Act, the Daw on 8andatory %nsurance on Eublic >oadways, the )inancial

*ervices *upervisory Authority Act governing the supervision of insurance companies,

brokers, agents, security companies and pension funds! and the Daw of


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personal insurance! entered into force on &st

of Ganuary ($$9. All four laws represent greater

harmoni:ation with B5 requirements andor an improvement in existing regulations.

/stablishment of insurance com'anies

atural persons and legal entities may establish insurance public limited companies. Theirindividualholding with voting rights may amount to a maximum of of total voting shares.

*pecial approval by the %nsurance Companies *upervisory Authority is needed for holdings

that exceed over .


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ist of la, acts that are closel0 connected ,ith riss in ariculture) and ris

manaement tools includin aricultural insurance:

Daw on protection from natural disasters epublic of Croatia,%M.($$

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;y type of activity, there are five companies in life insurance, seven in non-life insurance,

twelve companies that offer both life and non-life insurance and two re-insurance companies.

Although mostofthe companies are registered as composite companies, for six of them life

insurance represents their ma=or activity, while the other six have large shares of non-life

insurance products in their portfolio.

The growth and stability of insurance markets were also influenced by integration processes

in terms of mergers of insurance companies for =oint performance on the market. %n the last

ten yearsCroatian insurance markets have been scientifically changed. %n the middle of the

nineties, there were sixteen insurance companies in Croatia while ten years after that the

number has considerably changed. +alf of them have continued operating under the same

title. *ome of them ceased to operate, some were merged while others were acquisitioned

by stronger companies and do not exist any more as such. 8ost of them after they have

been bought operate under thebuyersname Erima became /rawe, Adriatic-Allian:, *ava-

Triglav!. %nsurance company /rawe +rvatska merged with *lavoni=a osiguran=e and Adria

osiguran=e - %nsurance Company 8editeran osiguran=e merged with Gadransko osiguran=e.

The companies ?iener *tadtische osiguran=e and @varner osiguran=e merged into one

insurance company and now they are operating under the name @varner ?iener *tadtische

osiguran=e. The newest insurance acquisitions are acquisitions of +elios osiguran=e by

@?*< and Dibertas osiguran=e by /enerali. The total number of (9 insurance companies in

Croatia is unrealistically high so it can be expected that a further integrations process will

take place along with an increase in market share of the largest insurance companies.

4espite a great number of insurance companies, the insurance market is highly

concentrated. The top insurance companies according to gross written premiums are

Croatia osiguran=e, Buroher:, Allian:, Gadransko osiguran=e and


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The largest insurer Croatia osiguran=e holds a '$# market share ;anka, ($$9!. %t is the only

remaining insurance company under state ownership. Although a leader, its market share

has decreased steadily during the last several years. %n ($$9, the company has stopped this

negative trend by changing its business strategy Erivredni v=esnik, ($$9!. The Croatian

/overnment, which owns 7& percent of the company, announced a plan of privati:ation untill

the end of ($$9. There is also a possible scenario of =oining Croatia osiguran=e with the

Croatian Eost ;ank also owned by the /overnment. Croatia osiguran=e is a leader in

agricultural insurance with a share in gross premium of about 3$# in crop and 9$# in

livestock insurance. Croatia osiguran=e has a long tradition in agricultural insurance and a

strong network of branches all around the country with skilled and experienced employees

in most of the cases, trained agronomists!.

All insurance companies in Croatia are organi:ed as =oint stock companies and their

founders are natural and legal persons from Croatia and legal persons from abroad.

evertheless, the %nsurance Act permits other organisational forms captive, public or mutual

insurance companies!.

The arrival of foreign investors in the domestic insurance market has also had an impact on

the development of insurance activities. %t has raised the competitiveness of Croatian

insurance companies, improved and increased the quality and diversity of insurance

products and services.

)ourteen insurance companies are ma=ority-owned by foreigner. +owever, foreign

companiesN share of the total insurance portfolio considering written premium does not

exceed (#. +owever, their share of the life insurance portfolio is considerable, amounting

to over $#.

Table 3: 4,nershi' of Croatian insurance com'anies considerin assortment

$Se'tember) 2""3&

8a=ority owned by Croatian

on-life

insurance

Dife

insurance

Composite

insurance>e-insurance Total

natural and legal persons

8a=ority owned by foreign legal

persons

& ' & 12

( ' 7 & 1*

Total 7 3 12 2 25

*ourceF CCB ;anking and )inance 4epartment. www.h g k .hr!

According to unaudited data, total written premiums of Croatian insurance in ($$ was 3,"3

billions kunas, which is &$.0# higher then in ($$' ;anka, ($$9!. 4uring the last five years

the strongest increase of total written premiums was accomplished in the segment of life

insurance.

642
http://www.hgk.hr/http://www.hgk.hr/


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Table 5: +ross ,ritten 'remium $""" unas&

2004 2005 2005/2004 index

Dife insurance &.3".$09 &.0$$.($9 &($,30

Total non-life insurance .$90.(70 .'93.$30 &$3,7

automobile liability insurance (.&&9.'&" (.(&.(03 &$9,"3

road vehicles-comprehensive 309.$& 790.0&' &$0,((

property insurance &.$('.979 &.$''.('" &$&,0&

health insurance &(3.93" &73.97& &'3,$$

accident insurance '0."37 '3&.$& &$(,'

Total 9.9'(."7' 3."93.(7' &&$,0&

*ourceF %nsurance Companies *upervisory Authority- httpFwww.d inad o s.hru plo ads s tat$& &( $ '.

Table 7: Share of total ,ritten 'remiums b0 t0'e of insurance $6&

Year 2000 2001 2002 2003 2004 2005

life ins, &9,7 &7,& ($,3 ((,( (",97 (,30

Total non-life insurance 7",( 7&,0 30," 33,3 39,"( 3',(&

automobile liability ins, "' "(,3 "&,0 "(,(9 "&,79 "$,9

road comprehensive ins, &$," &&," &(,( &&,7" &( &&,7&

property ins, &3,' &9 &9,( &,90 &,'" &',&3

health ins, 9," 9,' ",& &,3( &,0( (,

accident ins, 3," 3,& 3,& 3,"0 9,0& 9,"0

other non-life ins, 3,0 7,' 7,7 7,0 7,( 7,3"

Total &$$ &$$ &$$ &$$ &$$ &$$

*ourceF %nsurance Companies *upervisory Authority,httpFwww.dinados.hrindex.phpODA/+>P%4"

These positive trends were influenced by an increase in business activities of insurance

companies and economic policy measures including stimulus measures by giving tax relief

when taking out life and voluntary health policy. %n ($$, life insurance premiums increased

over ($# written premiums were &.0 billion kunas!. 4ue to this, life insurance share in total

insurance portfolio is, for the first time in Croatia, over (# (.7#!.

evertheless, it is considerably lower then in country members of the B5 where lifeinsurance holds more than over '$# of the insurance portfolio. %n addition, currently, only &-

643
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($# of Croatian citi:ens have life insurance policies. )urthermore, compared to the more

developed countries, Croatia has a lower value of life insurance policy per capita 7.3 5*4!.

Therefore, insurance companies consider that the Croatian insurance market will significantly

grow having a great selling potential. *lowly but constantly, life insurance becomes more

frequent form of investing, after real estate investment and bank deposits investments.

A permanent increase of written premiums is also reached in the segment of non-life

insurance.

The total amount of non-life written premiums in ($$ was .'3 billion kunas, which is 3.0#

more then in ($$'. Although this growth is weaker, it was considerably higher then in &000

and ($$$whenthe annual increase was "-'#. Among the non-life insurance portfolio there

is still the domination of obligatatory insurance. The highest share is automobile liability

insurance with a share of "$.9# of total written premiums in ($$. )urthermore, large share

exist inK property insurance &'.(#, road vehicles comprehensive insurance &&.7# and

accident insurance 9.'#.

Fiure 2: Share of ,ritten 'remium b0 t0'e of insurance $2""3&

other non-life

ins.

9%

accident ins.

%

health ins.

!%

"ro"ert# ins.

$% road

life ins.

&%

auto'obile

liabilit# ins

.

!(%

co'"rehensi)e

*ourceF %nsurance Companies *upervisory Authority

%n the period from Ganuary-*eptember ($$ non-life insurance companies achieved technical

profit of +>@ &$.'0 million, while at the same time life insurance companies recorded

technical profit of +>@ 39.9( million. ?ithin the first nine months in ($$ the net financial

result of the insurance sector in Croatia was a profit of +>@ (97.0 million which is an

increase of &$.3# compared totheprevious year.

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3. +eneral features

3.1. Insurance 'roducts a(ailable

Agricultural insurance in Croatia is completely market based and optional for Croatian

farmers.


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longer periodK b! group insurance for co-operations or contracted production!K c! for the

second crops on the same field in the same yearK d! if the same crop is insured against perils

from two different premium groups. %n the cases from b! to d! the discount goes up to ($#.

Although insurance companies usually do not apply bonus-malus system for crop insurance

sometimes it is possible. )or example, it could be applied in the case of multi-annual andgroup insurance. %n livestock insurance bonus-malus is possible.

Doss determination is simple but an expensive procedure. Doss determination is on a one-

time basis or the more then one-time basis procedure depending on the loss, phonological

stages and the period to harvest. Bstimator appointed by the insurance company! is

responsible for loss determination. *teps in the procedure of loss determination are &! pre-

assessment immediatelyafterthe risk event!, (! control once during vegetation! and "! final

assessment. Eercentage of yield loss multiplied by the insured sum, present the loss in

monetary values. Doss determination is based on the sample criteria not the whole insured

area. %n the case quality is insured too, quality classes are encompassed in calculation indifferent percentage of their value. Doss amount depends also on the vegetation period in

which risk occurred and possibility for replanting.

The importance of livestock insurance is less then crop insurance. ;asic risks covered by

livestock insurance are death in consequences of illness or accidental, diseases and

emergency slaughtering. Additional coverage includes stillbirth cows and claves and mare

and colt!, therapy, quarantine, show and exhibitions.

Eremium in livestock insurance depends onF &! animal species, (! category of animal

fattening, breeding, egg production etc.!, "! level of risk, '! insurance mode, ! insurancecoverage franchise!, 9! technical result bonus- malus!, 3! allowance and discount, 7! other

basis according to the premium groups

Devels of risk are a group of positive or negative factors that have influence on the animal

nutrition, transport, prevention!. There are five levels of threat. They have been used for

each of the premium groups. The specificity for particular animal species is indicated on

premium groups.

5sing this premium system, insurance can be arranged as insurance on value or forms of

insurance where the total annual animal production in large agglomerations is insured

4ue to this premium system, it is possible to insure particular tariff groups with participation

of insured in damage franchise!.

Tab for bonus-malus calculation

eali8ed technical result !onus and malus 'ercentae

R 3$# ;onus "$# Q #

3$#-&$$# ;onus $#

S &$$ # 8alus # - "$#

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;onus decrease of premium! and malus increase of premium! of each species and

category of animal are determined according to the technical result. The technical result is a

rate between liquidated damages and technical premium during the last three years. %f the

insured did not use the insurance during the last three years, bonus and malus could be set

using the available period one or two years!.

>ules that regulate the period for paying indemnity are prescribed in the insurance policy and

generally it is within two weeks after the procedure of loss determination is finished. %n the

case of crops it is not before earliest time in which the crop would be ready to use in the case

of no damage.

The market failures of agricultural risk sharing instruments in Croatia restrict potential for

efficient risk management and consequently generate a highly uncertain business

environment. Apart from hail insurance, other forms of agricultural insurance products index

insurance, income or revenue insurance! and hedging instruments are of limited supply.

Additionally, risk and low profitability often constrain external funds inflows causing fewer

investments and deteriorating a farms income stability and competitiveness.

Although financial markets in Croatia exhibited impressive and fast growth rate, it still isnt

the case in the rural financial market. Therefore government involvement in the agricultural

insurance market seems to be necessary at the moment. Currently it is in the form of

premium subsidies but other possibilities for government interventions in risk management

market should be explored as well.

%n the year ($$" the premium subsidy programme for agriculture was established according

to the >egulations on subsidies for insurance against damages in agriculture, fishery and

forestry.

According to the regulation the government subsidies (# of the premium paid to the

insurance companies. Earticipation in the program is open for all commercial farmers&

Table 9: Premium subsid0

($$'

for ($$"!

($$

for ($$'!

($$9

for ($$!

umber of users 3"0 '&'& '37

*ubsidy, kunas &'."'.(&&,&' ($.(39."79,&( (&.9(.37(,7'

*ourceF 8A)?8

Eremium subsidies increased the use of agricultural insurance as a risk management tool.

;ut, the number of users farmers that submitted request for subsidy! was still rather low

compared with the number of commercial farms in the farm register about &$,$$$!.

647


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Table : Aricultural insurance 'remium subsid0 'er 'roduction $2""3&

production %nsurance policy, no /ross premium, kunas

arable crop "3(( "0.9&&.&0',&$

planting materials ( &.9.''(,97

permanent crops $& &&."3.9$9,"

livestock (&'0 (7.33&.3'&,(&

aquaculture ' 9.9($.&3,&7

T


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developing and equipping of facilities for agriculture production, procuring of new equipment

and mechani:ation for agriculture, building and equipping of facilities for storage of

agricultural products and fish. The model can be described as attribution of ($ to ( percent

of the total investment and loan respectively. The maximum aid for investments can be (#

of the total value of the loan used but not more then ($# of the total investment value.

5. Co(erae in the last 0ears

5.1. Cro' insurance co(erae

%mportance of agricultural insurance according to its share in total property insurance

measured by gross premium! is relatively low. 8aybe therefore data about agricultural

insurance are scarce. Bspecially as it applies in the cases with regards to detailed data of a

specific production area, production values and similar are requested. O!

Fiure #: Share of aricultural insurance in 'ro'ert0 insurance $2""*&

(*%

$(*+,%

$*,&%

,*,(%

$*(9%

.otal non-life insurance Other non-life insurance Cro" /nsurance 0i)estock insurance

*ourceF +A)A

+ence, we have started with official data. %t seems that the premium subsidy resulted in anincreased premium in the year ($$'. *uch trends, even faster, continued in the year ($$

gross premium of about 77 million kunas! and in ($$9 as well.

Table 1": Cro' insurance) 'remium and damaes $2"""-2""*&

%nsurance 4amages

umber of policies /ross premium $$$ +>@! umber 4amages $$$ +>@!

($$$ &$7 '3.''9,3( 7'$ "&.'0,(0

($$& 007( '7.77,"& &""3 "7.'"",3&

($$( 3'& '9."$3,$$ 3'" '&.$3,$$

649


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($$" (&&$3 '7.0&&,$$ &$(0 .'",$$

($$' (3'77 9(.3(,$$ &9&" ".("7,$$

*ourceF +A)A

Doss ratio is above & negative result! only in one year while in the other years it is below &.

Fiure *: Aricultural insurance ross 'remium and damaes $2"""-2""*&

3$$$$,$$

9$$$$,$$

$$$$,$$

'$$$$,$$

"$$$$,$$

($$$$,$$

/ross premium

kn! 4amages kn!

&$$$$,$$

$,$$

($$$ ($$& ($$( ($$" ($$'

0ear

*ourceF +A)A

%n order to present data per crop group of crops and livestock and to get a closer view in the

situation we used data from Croatia osiguran=e d.d., 8inistry of Agriculture, )orestry and

?ater 8anagement, Croatian )inancial *ervices *upervisory Agency and expert advice as a

final resort. Therefore, data below are not more then rough estimation. ;ut such estimation

could be assumed pretty accurate. Bstimated data are the result of a survey conducted

especially for this report and therefore well indicate it as the source of information. ?ell

shortly explain 1methodology2. Croatia osiguran=e d.d. is a leader in agricultural insurance

and their data covers about two thirds of gross premium and damages. Croatia osiguran=e

d.d. share in gross premium in the period ($$$-($$' was 90#, 90#, 3, 3"# and 3(#

respectively. At the same period Croatia osiguran=e d.d. share in damages was 7"#, 7"#,77#, 0$# and 77#. ;ased on the Croatia osiguran=e data per crop type and livestock type

we distributed the rest of the premium and damages on productions using different keys.

@eys were largely based on the importance of specific crop and livestock types in other

insurance companies portfolio.

The average area under crop insurance is about ($$ thousand hectares. Arable crops are

the most represented. /rain crops with wheat and corn in particular and industrial crops with

tobacco, oil rape, soy and sunflower hold more then 0$# of insured area. )ruit in 00# of the

cases refers to apple production.

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Picture 2: ain insurance indicators $a(erae 2"""-2""*&

Area insured (alue

(9,&

&,"(#$,&0#

$,0#

$,9#

(#'# #

3&,((#

"$# 7#

grain industrial crops vegetables grapes fruit othercrops grain industrial crops vegetables grapes fruit other crops

'remium

&(# (#

$,0(#

& "3#

&&,03#

(# (,$#

'(,'#

"9#

grain indust rial crops vegetables grapes fruit other crops

*ourceF *urvey

Bxpectedly, fruit, grape and vegetable has a larger share in insured value, premium and

damages.

The area under insurance has a slightly increasing trend. >eal effects of premium subsidies

are still not very evident but it resulted with higher growth in the following years. 5se of crop

insurance has been increased by policy actions toward incentives for investments in

permanent crops as well.

Picture #: Area under insurance) ha $2"""-2""*&

&7$$$$ "$$

&9$$$$ "$$$

&'$$$$

&($$$$

&$$$$$

7$$$$

9$$$$

'$$$$

($$$$

grain

industrialcrops

($$$

&$$

&$$$

$$

vegetable

s grapes

fruit

othercrops

$($$$ ($$& ($$( ($$" ($$'

$($$$ ($$& ($$( ($$" ($$'

*ourceF *urvey

651


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Table 11: Insurance indicators 'er cro' rou's $2"""-2""*&

/rain

crops

industrial

cropsvegetables grapes fruit

other

cropsTotal

%nsured sum $$$ kn!

($$$ 9$.""0,0& "9"."($,3& (7.9,0$ ".&9,3 .7"7,($ &&.$"$,77 &.&9(.3$(,"9

($$& 7&&.303,'( ""3.90(,99 "(.&','$ ".&'$,"( "3.'(7,0' 7.&",( &.(7$."'0,(3

($$( 97(.&39,$0 "30.9&",37 ($.3",(7 '0.(70,(( 0.07,(' 9.07&,&0 &.&07.33&,7$

($$" 9&$.$7,"' '$3.",$' ((.977,$ (.0$$,(0 3&.7$3,$$ &".(&7,($ &.&37.((',0&

($$' 0&0.'(',$ '&."&',$ '$.0(3,$" 3'.7&3,33 3.79,7 &7.&"9,&" &.7$.'7,&

Eremium, $$$ kunas

($$$ &7.03",3 &.&&&,0" &.&3$,&9 9.(,79 .'&9,3( &7,"$ '3.''9,3(

($$& ((.',"0 &.&'7,7$ &.("','3 .&&(,39 '.&"&,70 97,$$ '7.77,"&

($$( &7.07,$9 &9.((9,'7 379,&7 '.093,&( .$(9,7 "&,"& '9."$3,$$

($$" &.(0(,(7 ($.'&&,$3 &.$(",'9 '."0(,$ 3.&(3,'$ 99',3' '7.0&&,$$

($$' (&.(9&,& ('.&7&,$ &.7"$,' 9.$($,"0 3.90,'( &.307,9( 9(.3(,$$

4amages, ha

($$$ &".$3,'7 .0'$,"9 &$,&' &.&7&,9( '0,7" '$,9( ($.7"0,$'

($$& &7.70,39 3.093, (3,30 &.&&0,70 ''9,$' 3',"' (7.',"7

($$( .(&7,$9 9.('&,"& "",0( 3(,70 '79,&0 3,0& &(.3&",(0($$" &&.$'&,0 &&.&$,0" &03,'3 9"9, 9"",(' 7(,3' (".903,77

($$' &3.0'7,"3 &'.9',0" &7,$" &.(90,0" &'3,7$ 0,&$ "'.$07,&

4amages $$$ kn!

($$$ &&."$',7' &$.$"",9& 9"7,$$ '.'30,&9 '.7(',' &30,(& "&.'0,(0

($$& &(.$',97 &'.0'3,&& &.9'7,93 '.('',3 '.0$',$" &7',9 "7.'"",3&

($$( .9,9" &0.7'','' (,0$ ".009,0" &&.'"3,70 &0,(( '&.$3,$$

($$" 9."9,'3 (3.'9,73 &.','& ".00',90 &'.3$",'7 &.&07,$7 .'",$$

($$' &.99',"( (&.""',$7 &.&$0,9( 0.9(&,9 .$9",30 '''," ".("7,$$

*ourceF *urvey

)ruit insurance is an especially sensitive insurance for insurance companies and fruit

producers as well. ;eside yield, fruit quality as a percentage of extra class fruits is even more

important. Therefore, fruit quality insurance is necessary. ;ut it is rather expensive about

$# of the premium rate without quality included! and, on the other hand, according to the

perceptions of producers do not cover fruit production enough. %t means that fruit is not

suitable for cooling and storing, the price is lower and producers lose customers in the year

when damages occurred. +aving negative results is repellent to insurance companies. %n

652


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addition, frost, the risk that regularly cause lots of damages on permanent crops, hardly

satisfies conditions of insurability and insurance companies try to avoid insurance of that risk.


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Table 1#: ain indicators of li(estoc insurance $2""#-2""3&

cattle pigs poultry hoofed animal Teinsurance rates are 9.0# of technical premium first layer! and (.'# of technical premium

for the second layer.

654


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9. Alternati(e ris manaement tools

9.1. ;isaster aid

The law on protection from natural disasters regulate actions financial and other types of

help! in the case of disaster. According to the law, disaster is a sudden and huge accident

that severely interrupts everyday life, causes victims, property, infrastructure andor

environment damages in the extent higher then it is the local communitys ability to eliminate

consequences.

4isaster could be caused by natural, technical, technological or biological events. ;y disaster

earthquakes, 3 degree or more 8ercalli-Cancani-*eiberg scale!, fire, floods, drought, hail,

frost, highsnow, snow drifts and avalanche, ice on the watercourses, land slides and similar

phenomena which causes significant changes in everyday life are understood as a disaster.

Fiure 3: Structure of 'erils in the disasters

&$$#

0$#

7$#

3$#

9$#

$#

'$#

"$#

($#

&$#

$#

&00 &009 &003 &007 &000 ($$$ ($$&

hail floods earthquake drought frost other

*ourceF 8A)?8

To obtain aid some conditions should be satisfied. is the volume of direct damages must be

higher then ($# of the local unit annual budget in the last year and the yield must be a

minimum of "$# less than the three year average. atural persons have a privileged right on

disaster aid from the national budget sources while legal persons have it under special

conditions. 8ost of the local governments do not have special budget item for disaster aid

but they use current reserves for ad hoc aid.

655


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6

Fiure 5: Annual damaes due to disasters

(.$$$.$$$.$$$,$$

&.$$.$$$.$$$,$$

&.$$$.$$$.$$$,$$

$$.$$$.$$$,$$

$,$$

&00 &009 &003 &007 &000 ($$$ ($$& ($$( ($$" ($$'

*ourceF 8A)?8

Average annual budget payment for disaster aid is about &7 million kunas. Lear ($$" due to

the extreme drought the government paid about '$$ million kunas. ;ut on the other hand,

the loss assessment is much higher. Comparing loss and disaster aid payment it is evident

that farmers get only a symbolic amount, namely about (# of the total loss.

Fiure 7: ;isaster aid as ratio bet,een aid and estimated loss

(,$$

($,$$

&,$$

&$,$$

,$$

$,$$

&003 &007 &000 ($$$ ($$& ($$( ($$" ($$'

*ourceF 8A)?8

The law and its goals are often criticisi:ed. %t is rather inefficient and can not accomplish its

main mission - grants in the case of disasters.


25/37

land rent and similar. The procedure in the case of disaster is complicated, slow,

bureaucratic, time consuming and costly. Aid is more then symbolic and late. Coordination

between local and national authorities is rather weak. The la, on 'rotection and rescue

$4fficial +a8ette o 17"


26/37

Ad=ustments to the disaster aid scheme are in the process and supposedly it will be finished

soon. Changes should contribute to efficiency of the disaster aid system. %t is clear that it will

obtain some form of catastrophic insurance. %nsurance companies, state and farmers will act

together but some details for example who will have the right to participate in programs,

under which conditions and similar! are still not clear.

%t seems that the government recognised the importance of other risk management tools as

well. /overnment and local authorities in some cases! already have started to support the

introduction and development of on-farm risk management strategies like hail nets, active

frost protection, investments in cooler and storing spaces and similar. %t could be expected

that such actions will be continued and even amplified very shortly.

Eremium subsidies are, at the moment, the only policy action toward agricultural insurance.

Bvidentlysome other measure will be necessary in the future. %nsurance companies assume

that farmers knowledge about agricultural insurance is low. %n that sense emphasis should

be given on training and education in the field of risk management. Bspecially it should be in

close connection with financial management and modern financial instruments. >isk analysis

in the case of feasibility studies and investment pro=ects is still neglected. ;eside the relative

complexity of such analysis, it leads us tothe second important problemF lack of data. Lield

and loss history data per farm are lacking whilst that might enable individual risk rating.

)rom the insurance companies side significant changes in the terms of new agricultural

insuranceproducts probably will not happen. There are few facts that support such a view.


27/37

1". eferences

;anka maga:ine. ($$9F Dife insurance. review in o.& from Ganuary. ($$9 Croatian Agency for *upervision of )inancial *ervices. ($$F %nsurance 8arket in

Croatia. available atF www.dinados.hr uploadsosigV%-I%($$.pdf

Croatian Chamber of Bconomy. ($$'F %nsurance 8arket in the >epublic of Croatia.

CCB. ;anking and )inance 4epartment. available at www . hgk.hr

Croatian Chamber of Bconomy. ($$F %nsurance 8arket in the >epublic of Croatia.

CCB. ;anking and )inance 4epartment. available at www . hgk.hr

%nsurance Companies *upervisory Authority. ($$"F %nsurance 8arket in the >epublic of

Croatia. available atFwww.dinados.hr

%nsurance *upervisory 4irectorate. ($$F %nsurance and >e-%nsurance Companies in

the >epublic of Croatia. Gune ($$

*tatistical reviews of %nsurance market available atwww.din a dos.hr

/erber. H. ;iWiX 4. 4rago=loviX. 4.. &000F )irst >esults of the Combined +ail Erevention

Erogramme with /round /enerators and >ockets in Croatia. *eventh *cientific

Conference on ?eather 8odification. Chiang 8ai. Thailand. Iol %%. "3-"37

Daw on +ail *uppression *ystem. ($$&.


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11. Technical Forms: Cro' insurance

% /rain crops

Product co(ered: /rain cropsSub>ect of insuranceF grain andor stalk panicle at sorghum!

Perilegulations on subsidies for insurance againstdamages in agriculture, fishery and forestry


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%% egulations on subsidies for insurance

against damages in agriculture, fishery and forestry


30/37

%%% oot and tuber cropssub=ect of insuranceF root or tuberIegetables, medicinal and ornamental plants- sub=ect of insuranceF depending of the planting intentTobacco- sub=ect of insuranceF leafs or seed if contracted!

+emp and line Q sub=ect of insuranceF stalk or seed if contracted!Eoppy- sub=ect of insuranceF poppy seed or opium)orage- sub=ect of insuranceF forage or seed if contracted!*allow for wickerwork- sub=ect of insuranceF brushwood*eed materialsF stocks, buds, vine-shot, seedlings, grafts



31/37

%I )ruits and wine grapes

Product co(ered $cro' t0'e) li(estoc) income&:

)ruit and wine grapes- sub=ect of insuranceF fruit



32/37

I )ruit trees and vines


)ruit trees and vines before and after reaching full capacity!

Perilegulations on subsidies for insurance against

damages in agriculture, fishery and forestry


33/37

665


34/37

I% Crops in greenhouseglass house


Crops in protected space glasshouse and greenhouse!

Peril


35/37

Crop is

!asic co(erae Com'ulsor0co(erae

/rains hail, fire and lightening windstorms and frost

Additional co(erae


36/37

12. Technical Form: i(estocinsurance

Product co(ered livestock!F

+oofed animals to the age of & years!

Cattle to the age of ten!

*heep and goats from 9 months old to six years old!

Eigs from one month old and minimum five kilograms to seven years old!

4ogs and cats from 9 months old to eight years old!

;ees

Bxotic animals mammals, reptiles, birds and fishes in closed space!

>abbits intensive farming!

)ur-bearing animals intensive farming!

Eoultry intensive farming!

)eather games intensive productionF pheasant, grey partridge, quail,!,


37/37

%s there a bonus-malus systemO Les

Time from the harvestdamage until payment of indemnity specify if it is maximum or average!

After reimbursement is done, usually within a two weeks period.

/eographic detail used by companies to determine tariffs. o

Compulsory for the farmerO o

)ranchise #!. 4oes it coincide with the triggerO

)ranchise exists and could be contracted in some cases but not all insurance companies offer it.

Eublic involvement subsidies to premiums, re-insurance, regulations!

*ubsidies to premium (#! exist on the state level >egulations on subsidies for insurance againstdamages in agriculture, fishery and forestry

agriculture insurance in croatia 2011

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