Russia: agricultural insurance will become easier and more affordable for small farmers


Russia: agricultural insurance will become easier and more affordable for small farmers

08/30/2020

The bill proposes to introduce an additional type of insurance for agricultural producers against natural emergencies

The Ministry of Agriculture of Russia, in order to further develop the mechanism of agricultural insurance, has developed a draft amendment to the Federal Law “On State Support in the Field of Agricultural Insurance”. The adoption of the bill will allow not only to increase the volume of insured sown areas, but also to reduce the financial burden on agricultural producers by increasing the subsidized part of the insurance premium, as well as to increase their sustainability in the event of damage. Taking into account the importance of ensuring the property interests of Russian agrarians with insurance protection, the department expects to agree and introduce these amendments already this year, which will allow starting the implementation of the updated mechanism in 2021.

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The bill provides for a number of innovations designed to make the agricultural insurance mechanism more accessible, including for small agricultural enterprises. In particular, it is proposed to introduce an additional type of insurance for agricultural producers against natural emergencies (ES). The new type of insurance contracts provides for insurance reimbursement to farmers of the costs of crop production in case of loss of crops due to an emergency after the official announcement by the regional authorities of the emergency regime. The Ministry of Agriculture of Russia proposes to increase the amount of subsidies for the payment of part of the insurance premium for the risk of loss of agricultural crops, as well as the death of perennial plantings as a result of natural emergencies. Thus, the level of subsidies under insurance contracts can be expanded from 50% to 80%, which should increase the interest of farmers in insurance programs with state support.

Within the framework of the existing association of insurers (NSA), it is envisaged to create a new fund of compensation payments in case of emergencies, which will be made if the insurer is unable to meet its obligations.

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