Yuri Rizha
This is evidenced by a study by expert Yuri Rizhi, chairman of the Agrocereale Association.
In 2024, according to preliminary estimates, the area of insured agricultural land will decrease again. In 2025 this process is likely to continue. Despite the fact that, as Logos-Press reported, this year insurance companies will pay farmers tens of millions of lei in insurance indemnities for damages caused by April frosts.
According to insurers, usually large insurance payments are the best insurance advertisement for farmers. But this principle does not always work. Last year, insurance payouts were also quite large. Nevertheless, agricultural risk insurance is stagnating at the level of about 1% of all farmland.
According to Yuri Rizha, the explanations for this are both economic and administrative. On the one hand, the current law on subsidized insurance (No. 243-XV, 2004) provides for rather generous compensation by the state (up to 70% of the insurance premium). However, it is often transferred by the Agricultural Payments and Investments Agency AIPA to the accounts of insurance companies with great delay. It is not uncommon for insurers to pay farmers compensation for insured events without waiting for the subsidized share of premiums. This imbalance badly affects the financial performance of insurance companies. Therefore, some of them restrain their activity in this segment of the insurance market.
On the other hand, in the conditions of rising prices of resources for agricultural production and, often, not very favorable prices for the sale of agricultural products, the insurance premium for farmers, even taking into account the subsidy, is a big financial burden. Especially since the most dangerous risks, in particular drought, are usually the most expensive insurance products. At the same time, insurance indemnities cover only a small part (8-20%) of the sum insured.
Read more in Friday’s issue of Logos-Press weekly.
