How will compulsory insurance in agriculture work? - Separate scheme/ Part of the premium is paid by the state and decreases year after year
The government has included the phenomenon of flooding in the mandatory insurance scheme. However, the draft law on mandatory insurance of homes against earthquakes and floods includes the determination of a premium according to the risk map and classification of buildings, only for homes and not agricultural products.
Meanwhile, the Ministry of Agriculture is drafting a completely separate draft for insurance in agriculture, not only against the phenomenon of floods, but also focusing on other phenomena.
Referring to SCAN TV sources, the Turkish model of agricultural insurance was taken into consideration for the design of this scheme, where the state and insurance companies are part of the scheme.
Specifically, the scheme is designed in such a way that part of the premium is paid by the state and part by the farmer. The scheme will have a degressive nature, which means that the level of the premium paid by the state budget will decrease from year to year. For example, if in the first year this part will be at the level of 60%, in the second year it will decrease to 50% and so on.
The elements insured by this scheme are frost, hail, and generally atypical temperatures that bring various consequences to production, for which insurance will be mandatory.
However, it is envisaged that there will be a mapping of the country into different areas, according to the most recurring phenomena that occur in them. In other words, the insurable product will be different in different areas.
Insurance companies will be the ones who will offer the insurance package. While the state plays the main role in promoting the process, helping to generalize the scheme, and the moment the insurance scheme is generalized, the premium level begins to fall, which is to the benefit of farmers but also of the budget.
Typically, the premium for this category of insurance is set at 2-5 percent of the insured product.
For example, if there is a hailstorm and it damages about 30% of the production, the insurance company determines the compensation according to the established percentage. The 2% level is applied in cases where the risk is low and the 5% level, when the risk is high.
Mandatory insurance in agriculture is also expected to be established as a criterion for farmers who want to benefit from the support schemes applied in this sector.
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