Without the legal guidance for agricultural insurance coverage, agricultural insurance compensation procedures and processes are usually prolonged.

In many cases, to determine the cause of a dead cow, insurance documents require five signatures of stakeholders, including the chairman of Communal People’s Committee, who even does not have any veterinary expertise. The process of agricultural insurance compensation for farmers is typically prolonged. In Bac Lieu province, farmers received the insurance compensation after 10 months of occurrence, said Mr Tran Cong Thang, Director of the Policy and Strategy Research Department under IPSARD.

According to data released by an official at the Insurance Administration and Supervision Department under the Ministry of Finance, as many as 316,545 farming households held insurance policies as of August 31, 2013. Total insurance premiums were VND339,576 billion. In particular, the total insured value is VND6,434.1 billion and actually paid compensation value was VND588.5 billion.

Three insurers joined this pilot insurance programme, including Bao Viet Holdings (BVH), Bao Minh Insurance Corporation (BMI) and Vietnam National Reinsurance Corporation (VNR). Bao Viet Holdings accounted for two-thirds of insured households, premiums, insured value, and compensation value.

On March 1, 2011, the Prime Minister issued the Decision No. 315/QD-TTg on pilot agricultural insurance for the 2011-2013 period in 20 provinces and cities, and for seven groups of agricultural products.

Particularly, rice insurance was carried out in Nam Dinh, Thai Binh, Nghe An, Ha Tinh, Binh Thuan, An Giang and Dong Thap.

Cattle, pig and poultry insurance was carried out in Bac Ninh, Nghe An, Dong Nai, Vinh Phuc, Hai Phong, Thanh Hoa, Binh Dinh, Binh Duong and Hanoi.

Catfish and shrimp insurance was carried out in Ben Tre, Soc Trang, Tra Vinh, Bac Lieu and Ca Mau.

As agricultural insurance is typical of high risk, especially fisheries, premiums from agricultural insurance account for 0.02 percent of total premiums of insurance companies. Hence, they are not very keen on reinsurance business. In 2012, the Government decided to increase fishery insurance premiums to 41 percent and lower 10 percent of administrative costs of insurance companies to remove difficulties against new insurance companies taking part this market. However, difficulties still exist and insurers still want to leave this market.

Before this reality, IPSARD is striving to study in a bid to resolve difficulties and encourage insurance companies to stick to the market. IPSARD is currently cooperating with the Spanish Agency for International Development Cooperation (AECID) to implement the insurance risk management system construction to raise the capacity of agricultural insurance and develop -private partnership (PPP). From this cooperation, Vietnam will learn agricultural insurance management experience from Spain to improve the regulatory framework, which is expected to be applied from 2015.

Source: VCCI