Insurance for shrimps and fish: Farmers put insurance companies into a dilemma

Shrimp farming households have not been aware of following right farming processes, techniques and density as guided. Photo: ST.

In addition to unexpected climate changes, disadvantaged areas and lack of program staff experience, and farmers’ awareness and participation in the program, especially in shrimp and fish farming households, were the causes of the failure concerned by competent authorities.

After 3 years of piloting agriculture insurance, certain achievements have been made. The number of farmers joining the pilot increased to 304,017. The entire value of insurances reached 7,747.8 billion dong with the total amount of insurance fees in the field of agriculture worth 394 billion dong. The total value of compensation was worth 712.9 billion dong.

Of these figures, there were 7,487 households which bought shrimps and fish farming insurance. The insurance value was 2,883.7 billion dong. The insurance fees amounted 218.1 billion dong and the compensation value was 675.9 billion dong.

The pilot results showed this great policy by the State and the Communist Party was essential and appropriate, being one of financial supporting measures, helping stabilize the people’s production and lives. This policy also contributed to implement social security policies. Thanks to the program, central and local authorities and individuals have been more aware of the necessity, meaning and advantages of agriculture insurance.

However, through the program, the Ministry of Finance perceives that agriculture insurance is complex which has been piloted for the first time with large experimental areas in 20 cities and provinces. Although, insurance companies recruited and trained staff who would be in charge of agriculture insurance, their poor performance and lack of experience resulted in difficulties in supplying service and risk management.

Moreover, natural disasters and epidemic diseases struck in an abnormal way; some farmers suffered huge losses in large areas (particularly shrimps and fish) so the scope and level of damage in terms of finance was significant to big insurance companies.

Further, many households and agricultural production organizations hesitated to participate in the program or selected high risk objects to buy insurances, which caused difficulties for the pilot with the principle of taking the mass number of participants in one field to fill up the small number of participants in the other field. Particularly for shrimps and fish farming insurances, households did not comply with farming processes, techniques and density as guided by the Ministry of Agriculture and Rural Development. Because of the farming features, insurance companies and local agriculture insurance steering boards could not control risks so losses of shrimps and fish farming insurances were so heavy (3 times higher).

One more problem shared by Mr. Nguyen Quang Huyen – Deputy Director of Insurance Control and Supervision Department is that foreign re-insurance companies do not want to give insurance for shrimp and fish again. Thus, insurance companies would face many issues in arranging re-insurance. In case insurance companies implement shrimp and fish farming insurances but can not receive re-insurance abroad with the recent losses, insurance companies’ financial and payment ability will be affected.

The experiment of agriculture insurance was completed in 2013. Deriving from the program’s meanings, the Government still has the guidelines to continue with the program in the coming time.

Sharing on the orientation, Mr. Huyen said: based on the findings and evaluation of difficulties in deploying the agriculture insurance program, the Ministry of Finance found the resuming of agriculture insurance and the making of a policy encouraging farmers to buy insurance very essential in the context of severe weather with unexpected damages and negative impacts on the economy, society and especially agro-production.

Hence, the Ministry of Finance is in coordination with the Ministry of Agriculture and Rural Development to seek for localities’ opinions and working with insurance companies to complete a report to the Prime Minister for keeping the agriculture insurance program.

The further performance would offer no limitation of objects and areas to be insured. The program should be conducted in a voluntary manner with support from local budgets to pay insurance fees. Localities would balance their budgets to ensure and focus on assisting disadvantaged objects (poor and nearly poor households).