Agricultural insurance system: review of the experience of developed countries

This review article is aimed at getting acquainted with the experience of developed countries in insuring the risks of agricultural producers. The creation of a reliable mechanism for their insurance protection is currently one of the aspects of ensuring food security of the republic and a special sphere of state interests. The purpose is to show common insurance practices and countries' policies in dealing with this issue. Methods – in the process of analyzing and evaluating the international level of state support for agricultural insurance, the author used the following research methods: content analysis, which allows to identify the main areas related to state financing of agricultural sector; on the basis of a systematic approach, the degree of state participation in insurance operations was determined; graphical interpretation made it possible to visualize this process on the basis of information received. Results – the article presents aspects of state investment of insurance premiums in agricultural sector. The author identifies and graphically displays three main categories of state assistance in agricultural insurance. The results of the review can be used to conduct research in all regions of the republic. Conclusions – world experience shows that subsidizing insurance payments is the most effective way to support small and medium-sized businesses and ensure economic sustainability of the industry, reduce negative consequences, including loss of income in production of products associated with the onset of adverse natural events. A coordinated and strategic approach to managing the insurance market, government support and effective mitigation methods are important, while direct government reimbursements are ineffective in the long run and do not contribute to the prevention of risk situations.

1. Vyas, S., Dalhaus, T., Kropff, M., Aggarwal, P. & Meuwissen, M.P.M. (2021). Mapping global research on agricultural insurance. Environmental Research Letters, 16, 103003.

2. Agricultural Insurance Market by Coverage (Multi-peril Crop Insurance (MPCI), Crophail Insurance, Livestock Insurance, and Others), By Distribution Channel (Banks, Insurance Companies, Brokers/Agents, and Others), By End-Use, and by Region Forecast to 2028. (2023). Available at:https://www.reportsanddata.com/report-detail/agricultural-insurance-market (date of access: 23.12.2022).

3. Zeng, S., Qi, B. & Wang, M. (2022). Agricultural Insurance and Agricultural Economic Growth: The Case of Zhejiang Province in China. International Journal of Environmental Research and Public Health, 19, 13062. https://doi.org/10.3390/ijerph192013062.

4. Xinhua News (2022). China's agricultural insurance premium rises 18.4% in 2021. The State Council of the People's Republic of China. Available at: http://english.www.gov.cn/archive/statistics/202201/15/content_WS61e25ef2c6d09c94e48a3aa1.html (date of access: 25.12.2022).

5. Raju, K.V., Naik, G., Ramseshan, R. & et al. (2016). Transforming Weather IndexBased Crop Insurance in India: Protecting Small Farmers from Distress. Status and a Way Forward. Research Report IDC-8. Patancheru 502 324. Telangana, India: International Crops Research Institute for the Semi-Arid Tropics, 36.

6. Zhang, J., Zhang, Z. & Tao, F. (2020). Rainfall-Related Weather Indices for Three Main Crops in China. International Journal of Disaster Risk Science, 11(4), 466-483.

7. Beckie, H.J., Smyth, S.J., Owen, M.D.K. & Gleim, S. (2019). Rewarding Best Pest Management Practices via Reduced Crop Insurance Premiums. International Journal of Agronomy, 2019, 9390501, DOI: 10.1155/2019/9390501.

8. Shirsath, P., Vyas, S., Aggarwal, P. & Rao, K.N. (2019). Designing weather index insurance of crops for the increased satisfaction of farmers, industry and the government. Climate Risk Management, 25, 100189.

9. Alam, A.S.A.F., Begum, H. & et.al. (2020). Agriculture insurance for disaster risk reduction: A case study of Malaysia. International Journal of Disaster Risk Reduction, 47, 101626, https://doi.org/10.1016/j.ijdrr.2020.101626.

10. Tok, N., Çobanoğlu, F. & Tunalıoğlu, R. (2022). Parameters that Motivate Table Olive Farmers To Buy Agricultural Insurance: The Case of Western Turkey. Erwerbs-Obstbau. DOI: https://doi.org/10.1007/s10341-022-00682-x.

11. Trusova, N.V., Tanklevska, N.S., Synchak, V.P., Prystemskyi, O.S. & Tereshchenko, M.A. (2020). State support of agro-insurance of agricultural risks in the market of goods derivatives of Ukraine. Industrial Engineering and Management Systems, 19 (1), 93-102.

12. Andriushchenko, K., Ishchenko, M., Sahaidak, M., Tepliuk, M. & Domina, O. (2019). Prerequisites for the creation of financial and credit infrastructure of support for agricultural enterprises in Ukraine. Banks and Bank Systems, 14 (2), 63-75. DOI: 10.21511/bbs.14(2).2019.06.

13. Katan, L., Dobrovolska, O. & Espejo, J.M.R. (2018). Structural modeling of the financial support for the Ukrainian agrarian sector. Investment Management and Financial Innovations, 15 (3), 199-211.

14. 1Boranukov, M. (2020). Sovershenstvovanie sistemy gosudarstvennoj podderzhki agrostrahovanija. Ministerskaja nauchnaja diskussija na temu «Povyshenie jeffektivnosti bjudzhetnoj politiki i optimizacii bjudzhetnyh rashodov na razvitie otraslej APK s uchetom opyta gosudarstvennoj podderzhki sel'skogo hozjajstva v zarubezhnyh stranah [Improvement of the system of state support for agricultural insurance. Ministerial scientific discussion on the topic «Improving the efficiency of budget policy and optimizing budget expenditures for the development of agro-industrial complex, taking into account the experience of state support for agriculture in foreign countries]. Available at: https://www.nifi.ru/images/FILES/NEWS/2018/Boranykov_21.03.2018.pdf (date of access: 23.12.2022) [in Russian].

15. Swiss Re. (2020). Economy and insurance outlook. Swiss Re website. Available at: https://www.swissre.com/institute/research/topics-and-risk-dialogues/economy-and-insurance-outlook.html?to=36 (date of access: 23.12.2022).

16. Mato-Amboage, R., Touza, J. & Soliño, M. (2022). Understanding Farmers’ Preferences Towards Insurance Schemes that Promote Biosecurity Best Management Practices. International Journal of Disaster Risk Science, 13, 705– 715, https://doi.org/10.1007/s13753-022-00435.

17. Reyes, C.M., Agbon, A.D., Mina, C. D. & Gloria, R.A.B. (2017). Agricultural insurance program: Lessons from different country experiences. Philippine Institute for Development Studies (PIDS), Quezon City, 35. PIDS Discussion Paper Series, 2017-02.

18. Suieubayeva, S.N., Denissova, O. & Sloniec, J. (2022). The insurance system in AIC: advantages, structure, mechanisms. Problems of AgriMarket, 4, 43-50. https://doi.org/10.46666/2022-4.2708-9991.04