Existing problems of agricultural insurance

1. The current situation of agricultural insurance in my country

my country is a traditional agricultural country, with 85% of the total rural population. Among the economic components of our country, the rural economy occupies an important position. Our country is also one of the countries with the most serious natural disasters in the world. Therefore, it is particularly important to transfer the huge risks in agricultural production and protect the lives, property and economic results of farmers from unexpected losses. Since my country's social security system is not yet perfect, the current natural disaster relief channels in rural areas mainly rely on national fiscal transfer payments, and the proportion of commercial insurance relief is very low. In economically underdeveloped areas, rural commercial insurance has not yet been covered. Since the resumption of agricultural insurance business in 1982, my country's agricultural insurance has been in a sluggish state for a long time. In recent years, my country's insurance industry has developed vigorously, and the imbalance in the development of agricultural insurance has become increasingly prominent. From 1992 to 2004, agricultural insurance premium income dropped from 817 million yuan to 396 million yuan. By 2004, the per capita premium was less than 0.5 yuan. From 1985 to 2004, the loss rate of agricultural insurance has remained high, with the comprehensive loss rate as high as 120%, which is far higher than the 70% profit critical point recognized by the insurance industry. Under this circumstance, in order to promote the development of agricultural insurance, the central government has issued six consecutive "No. 1 Documents" since 2004, emphasizing the importance of policy-based agricultural insurance pilots. The development situation of agricultural insurance in our country is grim, and it has reached a point where it is necessary to accelerate its development.

2. Main problems in agricultural insurance

The reasons for the slow development of agricultural insurance mainly lie in relevant policy factors, the attitudes of local governments and insurance companies, and farmers' awareness of this.

(1) Farmers have low income and lack the enthusiasm to participate in insurance.

In the past few years, due to oversupply and falling prices of many agricultural products, farmers' income from agriculture has decreased. It is especially difficult for pure farmers who are mainly engaged in agriculture to increase their income. In 1997, the per capita net income of farmers from agriculture was 1,268 yuan. From 2003 to 2009, the net income of farmers from agriculture was lower than this level for six consecutive years. With such a low level of income, apart from the various taxes and fees that must be paid, living expenses, children's education expenses, and the purchase of fertilizers, pesticides, feeds and other necessities, each farmer's truly disposable income is very little. . Having to pay another agricultural insurance premium is obviously unacceptable to most farmers. At the same time, due to strict control over the scale of agricultural insurance and complicated operations, the two parties often have large differences in opinions when it comes to compensation valuation. Some farmers who originally wanted to participate in the insurance often chose to give up because of this. In addition, in the 1980s, farmers paid pensions at social security stations, but in the end they did not receive effective protection. This also made some farmers lack confidence in insurance and therefore were not enthusiastic about participating in insurance.

(2) Insurance companies lack strength and traditional agricultural insurance is unsustainable.

Agricultural insurance is a kind of insurance that depends on the weather. Often, one disaster year can eat up the fund accumulation of the past few years. The proportion of China's agriculture affected by disasters is about more than 40% every year, which is 10%-20% higher than that of other developed countries. In recent years, China's agricultural losses due to natural disasters have been approximately 12.5 billion yuan per year, while the world average is only about 50 billion yuan per year, which means that China accounts for 1/4 of the total. Agricultural insurance is a type of insurance with low fees, high risks, and high loss ratio. The break-even point is 65% to 70% capital preservation. The large scale and unpredictability of natural disasters and epidemic outbreaks make it technically impossible for insurance companies to avoid risks, and the premiums collected are insufficient to maintain compensation payments. Therefore, the risks of operating agricultural insurance are much greater than those of other current property insurance products. If the insurance company is not strong enough, it will be difficult to operate agricultural insurance, so there are only a handful of insurance companies developing agricultural insurance. Currently, only two companies, PICC Property and Casualty Insurance Company and China United Property and Casualty Insurance Company, offer agricultural insurance, and due to perennial losses, their business is also shrinking sharply. (3) The support provided by the state finance is insufficient.

Agricultural insurance is different from the disaster relief provided by the civil affairs department, and also different from general commercial insurance. It not only involves the redistribution of rural income, but also requires it to be consistent with the government's policy objectives. At present, the government only provides business tax exemption for agricultural insurance, which is obviously not enough. The state should introduce relevant laws and policies as soon as possible and increase financial subsidies so that insurance companies can truly see the benefits. Only when commercial insurance companies see the benefits of agricultural insurance can they spontaneously develop the market. However, the current agricultural insurance market is unprofitable. In this case, without higher government subsidies, property insurance companies will not voluntarily enter the industry, and those who have already entered will gradually have the idea of ??abandoning this part of the business. Agricultural insurance is a socialized systematic project, and its basis should be government action. China's agricultural insurance has developed to an "embarrassing" stage. Commercial insurance has proven to be unsuitable for China’s relatively decentralized, family-based “small agricultural” production method, so the country must “cover the bottom line.” Relevant departments should introduce relevant supporting policies as soon as possible. Otherwise, the development of agricultural insurance will only remain at the stage of "calling and shouting".

(4) The moral hazard of agricultural insurance is relatively high.

my country's agriculture is based on family production, the operation is relatively decentralized, and moral hazard is more likely to occur. Therefore, the underwriting procedures of agricultural insurance are also relatively complicated, and the investigation and claim costs are high.

Before insurance companies compensate insured farmers for their losses, the investigation procedures are cumbersome and consume relatively large amounts of manpower and financial resources. If the insurance company is slightly negligent, some insured farmers may falsely report losses and obtain additional benefits. (5) The agricultural insurance organizational system is decentralized.

The current agricultural insurance organization system composed of insurance companies operating alone, insurance companies jointly operating with local governments, and insurance cooperatives operating insurance cooperatives is decentralized and cannot fully mobilize the government, insurers, and insured persons. The positivity of the three. At the same time, policy-based insurance institutions are not sound, making it difficult to reflect the main role of the agricultural insurance organization system. These have restricted the rapid development of agricultural insurance.

(6) There is a shortage of agricultural insurance professionals.

The extreme shortage of talents has become an important factor restricting the rapid development of my country's insurance industry. Agricultural insurance involves multiple disciplines such as agricultural economic management, commercial insurance, agricultural budgeting, agricultural meteorology, farmland water conservancy, animal husbandry and veterinary medicine. It covers a wide range and requires multi-faceted collaboration. At present, most agricultural insurance practitioners in my country have not received specialized insurance education. Due to the scattered agricultural insurance business, the workload of survey quotas and compensation redemption is larger than that of other insurance types. In addition, many rural insurance practitioners have backward infrastructure, inconvenient transportation, and poor working environment. Insurance practitioners stay away from agricultural insurance. Various reasons lead to the low professional quality of agricultural insurance practitioners, especially the serious shortage of technical talents such as underwriting, claims settlement, actuarial science, and comprehensive talents such as management, marketing, and training, which greatly restricts the rapid development of the insurance industry. (7) There are few insurance types and weak research and development capabilities.

Although agricultural insurance has developed to a certain extent, the current structure of insurance products is not reasonable, with a small number of products, low quality, slow update speed, and lack of pertinence. There are very few products that are truly tailored according to farmers' income levels and risk profiles, and cannot meet the diverse needs of the market. This is also directly related to the lack of agricultural insurance professionals and weak insurance product research and development capabilities.

3. Countermeasures to accelerate the development of agricultural insurance in my country

(1) Strengthen agricultural insurance legislation.

Agricultural risks have a certain relevance, so the standardized, orderly and healthy development of agricultural insurance relies more on the support of a sound legal and regulatory system. In view of the particularity of agricultural insurance, many countries attach great importance to legislation on agricultural insurance and formulate implementation details to ensure the smooth and healthy operation of the agricultural insurance system and effectively protect the interests of farmers. However, our country currently does not have a complete set of laws for agricultural insurance. Drawing on the successful experience of foreign agricultural insurance, our country should legislate agricultural insurance as soon as possible, and make clear provisions in the form of law on the purpose, objectives, coverage, protection levels, rate determination, compensation standards, implementation methods, etc. of agricultural insurance , and at the same time, an agricultural insurance compensation mechanism should be gradually established.

(2) Establish a comprehensive agricultural insurance company.

Competition in the insurance market is becoming increasingly fierce, and commercial insurance companies have no time to take into account the role of agricultural insurance in supporting agricultural development and rural economy and society. Therefore, the business model of commercial insurance companies undertaking agricultural insurance can no longer adapt to the needs of the real society. Agricultural insurance should be separated from commercial insurance, and then property insurance, personal insurance, etc. should be taken into consideration to establish a policy-based comprehensive agricultural insurance company. Gradually form a sound organizational system with the macro-control of the national agricultural insurance company guiding the development direction of agricultural insurance, the regional management of provincial agricultural insurance companies as the business leader, and the agricultural insurance cooperatives at the county and township levels as the operating entities. This is not only in line with the country’s agricultural policy, but also in line with the country’s fundamental interests.

(3) The government should provide special policy support.

Currently, agricultural insurance in my country is exempt from business tax and is the same as commercial insurance in other respects. To develop agricultural insurance, insurance companies alone are not enough; supporting policies must be available to support it. In this regard, we can learn from foreign practices. The development history of agricultural insurance in other countries around the world shows that the government's active policy operation is an important guarantee for the development of agricultural insurance. Agricultural policy insurance means that the government leads the supply of agricultural insurance. The government regards agricultural insurance as a special quasi-public item and provides operating subsidies and other support, and is responsible for providing or designating institutions to operate it. The purpose of the operating organization is to provide economic compensation for risks and losses in agricultural production, not to make profits. In view of the vast scope and uneven development of China's rural areas, policy preferences should be given to insurance products developed by insurance companies to serve agriculture, rural areas, and farmers. For example, companies that apply for such products should be given priority to open insurance company licenses. At the same time, a classified guidance approach should be adopted for the insurance industry's services for "agriculture, rural areas and farmers". For example, in places with slow economic development, priority should be given to the development of disaster prevention and loss prevention products that ensure the normal operation of agricultural production.

(4) Establish legal agricultural insurance types.

According to the principle of the law of large numbers in insurance, the higher the insurance participation rate, the greater the stability coefficient and the more reasonable it becomes. However, due to the influence of social environment, economic environment, natural environment, affordability and other factors, various places There is a large gap in the insured's ability to participate in insurance. In response to regional differences, some statutory agricultural insurance can be set up, just like third-party liability insurance in car insurance. This will help improve the insurance awareness of policyholders, enhance the capital accumulation of insurance companies, and stabilize the operation of agricultural insurance.

The premiums for statutory insurance can be provided by the finance in the initial stage, or allocated from poverty alleviation funds, or social donations can be mobilized like donations to "Hope Primary School".

(5) Establish an agricultural insurance reinsurance mechanism.

my country’s agricultural natural disasters are frequent, so agricultural insurance is a high-risk insurance. For agricultural insurance to develop sustainably, it must be supported by a complete reinsurance mechanism. The central government should vigorously promote the agricultural insurance reinsurance system. For the production of agricultural, forestry, animal husbandry, fishery and other products related to the development of the national economy, the government should take the lead and organize domestic commercial insurance companies with reinsurance experience to provide reinsurance for agricultural insurance, so as to disperse agricultural insurance risks and reduce the risks of agricultural insurance. Risk liability.

(6) Establish a multi-channel agricultural insurance system.

my country has a vast territory, uneven development of agriculture and rural economy, and large differences in agricultural risks. At this stage, it is necessary to establish a national (policy or non-policy) agricultural insurance company to uniformly operate agricultural insurance business. The conditions are not yet mature in terms of market conditions, management level, risk diversification mechanism, etc. Therefore, at this stage, the development of agricultural insurance in my country should follow the path of diversifying the organizational forms of operating entities. An agricultural insurance operating system with diversified entities can be established. The main forms include commercial insurance agencies, professional agricultural insurance companies, agricultural mutual insurance companies, policy agricultural insurance companies, foreign-funded or joint venture insurance companies (based on the introduction of advanced technology, management experience , high-quality talents), etc. The specific form to be adopted should be determined according to different regions, different periods, and different economic development conditions. It is necessary to encourage existing commercial insurance companies to develop rural and agricultural insurance businesses, and at the same time introduce foreign insurance companies with expertise in agricultural insurance to form an agricultural insurance system in various forms and channels.

(7) Strengthen the training of insurance talents.

There is currently a shortage of insurance talents in our country. According to statistics, tens of thousands of additional insurance talents are needed across the country every year. Therefore, to develop agricultural insurance, we must also pay attention to talent training. Investment in the training of insurance talents should be increased and the number of college students enrolled should be expanded. At the same time, we will strengthen the management of insurance qualifications and carry out various forms of insurance vocational training to provide talent guarantee for the smooth development of agricultural insurance in our country.

In short, the reform and development of agricultural insurance in my country has entered the most critical and difficult period. With the gradual implementation of various policies and measures to support "agriculture, rural areas and farmers" and the implementation of the policy of "giving more, taking less, and letting go" for farmers, we believe that my country's agricultural insurance will definitely break the "hard ice" and create a new situation. .

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