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Vancouver, British Columbia, CanadaJune 16 - 18, 2013
www.iarfic.orgHosts:
Study on the Innovation of Agricultural Insurance
System in China
Dr. Long Wenjun
Research center for rural economy(RCRE) in MOA in China
Main Contents
The innovation of agricultural insurance in China
The problems of the development of agricultural insurance in China
Some suggestions for developing the agricultural insurance system
1.The innovation of agricultural insurance in China
1.1 Steady expansion of coverageIn 2007, agricultural insurance began to pilot in six
provinces. the central finance offers premium subsidies only to corn, soybeans, wheat and cotton.
Now it is expanding to the whole country, the scope of subsidies is expanded to 15 kinds of agricultural products . The premium income of agricultural insurance has reached 24 billion RMB yuan in 2012.
The premium income and claims of agricultural insurance since 2007
8
53
110.7 133.9 135.9
174
240
6 30
64.1 95.2 96
81.8
148
0
50
100
150
200
250
300
2006 2007 2008 2009 2010 2011 2012 Year
100 million
Agricultural insurance premiums Agricultural insurance claims
1.2 The premium subsidies continue to increaseThe central finance subsidizes the proportion of 35%
of the premium for farming sector (40% in the Midwest area),
The share of provincial financial subsidies is 25%; for aquaculture sector, central government subsidizes 40% (50% in the Midwest area),
The share of provincial financial subsidies is 30%.
The central budget of subsidies for agricultural insurance premiums increases from 2.15 billion RMB yuan in 2007 to 9 billion yuan in 2011, the average annual growth rate is 45 %.
Now the financial subsidies of all levels of governments are above 75%.
1.3 Function for disaster compensation increasing obviouslyAgricultural insurance plays an important role of "stabilizer" in compensating for the loss of the affected farmers and helping them resume production as well as guaranteeing a steady income for farmers. The claims of agricultural insurance added up to 14.82 billion yuan in 2012, and 28.18 million farmers had benefited from agricultural insurance
1.4 Gradual improvement of agricultural insurance institutions
After 30 years of development, a lot of insurance institutions have been built up, such as comprehensive insurance companies, professional insurance companies, reinsurance companies, professional associations, insurance brokers and so on.
From the perspective of market shares, comprehensive and professional agricultural insurance companies account for 99% of the national market share.
Framework of agricultural insurance institutions
Direct insurance
institutions
insurance brokers
comprehensive
insurance
companies
professional
insurance
companies
Anxin Agricultural Insurance Co.,Ltd
Anhua Agricultural Insurance Co.,Ltd
Yangguang Agricultural Mutual insurance
Co.,Ltd
Joint
companies Groupama Avic Insurance
professional
associations
China Fishery Mutual Insurance
Association
Agricultural Machinery risk Mutual Aid
Association in Shaanxi ,Hubei, Hunan
PICC Property and Casualty Company Ltd
China United Property Insurance Company Ltd
Reinsurance institutions
China Reinsurance (Group) Company
Yian,Jiangtai and Changcheng insurance brokers
Agricultural insurance institutions
2.The problems of the development of agricultural insurance
2.1 Low coverage of agricultural insuranceBy 2011, the coverage of crop insurance accounts for
only 33% of the sown area. The area with the coverage of agricultural insurance in Heilongjiang, the most important grain province of China, is 6,758,000 mu, the coverage percentage is 37.13%.
The insurance of agricultural machinery and seed industry is also not in the list of subsidy budget.
2.2 Low levels of protection of agricultural insurance
The insured amount of agricultural insurance was determined in 2007 with reference to the previous direct materialization cost, and it was far below the farmers' actual costs. It is estimated that the gap between agricultural insurance and the direct materialization cost is about 35%.
2.3 The local governments of major grain producing areas face a financial pressure to subsidize
Local governments need to provide some premium subsidies, so more subsidies are required if the scale of agricultural insurance is getting larger.
3.Some suggestions
3.1 Establish Perfect Agriculture insurance Supervision System
Agriculture insurance policy should be brought into the overall frame of nation system to solve the questions of “agriculture， peasants and rural areas”. We should make competent department clear， and establish national agricultural risk management system in the unified coordination of the State Council.
3.2 Establish the Agriculture insurance Management System of Participators
Under the support of national policy and local government， the cooperation platform should be established， which includes agricultural technology， animal husbandry veterinarian department， and insurance organization，farmers’ cooperative， leading agricultural enterprises， farmer households and financial system.
3.3 Establish Agriculture Catastrophe Risk Management System
It is necessary to make the revenue preferential policy of agriculture insurance business clear. The reserve fund of agriculture insurance catastrophic risk should be used to the compensation accumulation of agricultural catastrophic disaster.
