The new insurance system in the agricultural sector came into effect

A new insurance system in the agricultural sector has come into effect in the republic. The insurance operator is the Fund for Financial Support of Agriculture, a subsidiary of the KazAgro Holding.

In contrast to the compulsory form of insurance in crop production that has been in force since 2004, the new one has several innovations.

First, agribusiness insurance is now voluntary.

Secondly, there are no restrictions by industry - you can insure any areas within the agricultural sector.

Thirdly, state support is provided in the form of subsidizing insurance premiums. It is aimed at stimulating agricultural producers and reducing the cost of the insurance contract by half: 50% of the insurance premium will be subsidized by the state, for which about 2.5 billion tenge has been allocated from the republican budget this year.

When developing the new system, the problematic issues of compulsory insurance in crop production were taken into account. So, in order to ensure the protection of the interests of agricultural producers, only insurance companies licensed by the Agency of the Republic of Kazakhstan for the Regulation and Development of Financial Markets will be able to operate in the system.

The system involved three international reinsurance companies with an “A” rating in the global insurance market. They will reinsure the risks that domestic companies take on. This will ensure guaranteed payments in the event of insurance risks.

All procedures, starting from the conclusion of the contract and ending with payments, will be carried out on the electronic platform based on the electronic digital signature of the agricultural producer. Automation of processes will minimize the human factor and ensure transparency of work.

To date, the Fund for Financial Support of Agriculture has approved insurance products based on the moisture index in the soil - its lack and excess. In other words, an agricultural producer can insure his crops against summer drought and autumn rains. Grain (wheat, barley, corn, oats) and oilseeds (sunflower, rapeseed, flax) crops are subject to insurance. For monitoring, information will come from remote sources of ground sensing. The moisture level is monitored on an ongoing basis, and the fact of the occurrence of an insured event is recorded automatically.

Having received a notification in the personal account of the system and by e-mail about the occurrence of an insured event, the insured (agricultural producer), using an EDS, draws up an application for payment to the insurer (insurance company), which ensures the payment.

As practice shows, more than 60% of insurance claims are due to lack of moisture, that is, drought. In this regard, and also taking into account the completion of the sowing campaign, the drought insurance product acquires special relevance.

In order to insure against the risk of lack of moisture, agricultural producers must conclude an insurance contract by June 15 this year. The insurance period will cover 3 months - from May 15 to August 15, 2020.

Excess moisture insurance contracts must be concluded before August 15, insurance coverage will be valid from August 15 to October 15, 2020.

The list of insurance products will expand as the insurance system in the agro-industrial complex develops, taking into account the relevance and demand in the market.

For all questions, contact the Fund for Financial Support of Agriculture JSC by phone +7 (7172) 67 84 06.