Bao Minh pioneers coffee-grower insurance

Bao Minh Insurance Joint Stock Corporation has started to trial agricultural insurance by insuring coffee farmers in Central Highland Dak Lak Province, according to a company official.

If the trial is successful the insurer will expand its agricultural insurance services to all rice and coffee farmers.

The insurers Index-based Agricultural Business Interruption Insurance Policy is a preparation for the implementation of the Government’s upcoming programme on farming insurance for an experimental period between 2011-13, Bao Minh’s Deputy General Director Pham Xuan Phong said.

Under the company’s trial policy, Dak Lak coffee farmers would be insured for losses and extra costs (business interruption loss) caused by low levels of rainfall in the insured period.

Losses and costs incurred from low levels of rainfall would be calculated against the Cumulative Rainfall Index as measured at the designated rainfall gauging station and published by Central Highlands Regional Hydro-Meteorological Centre of Viet Nam, the insurer said.

Bao Minh has co-ordinated with the province’s Agricultural Promotion Centre to finalise policies with a number of farmers, Phong said.

As around 70 per cent of Viet Nam’s population lives in rural areas, last year the Ministry of Finance publicised the draft of the Prime Minister’s decree on farming insurance as a new step to support agricultural production.

Under the draft decree, poor farming households would receive a subsidy of up to 100 per cent of the insurance premium. The support to other farming households would be 60 per cent. Agricultural production organisations would be supported 50 per cent.

According to the draft, there are three main categories of coverage, including cultivated crop (rice), domestic animals (buffalo, cows, pigs and poultry) and aquaculture (tra and basa fish, black tiger shrimp and white-leg shrimp).

The insurance sector’s earnings from agriculture insurance is insignificant compared to the total non-life insurance figure, according to Phung Dac Loc, Secretary General of the Viet Nam Insurance Association. The agricultural premium turnover in 2009 was VND1.7 billion, while total non-life insurance premium turnover was VND13.6 trillion (US$649.7 million).

Agriculture insurance has been slow to develop in Viet Nam because of the small scale of household farming; farmers often can’t or won’t afford it; and the risks of unexpected natural calamities and epidemic diseases. — VNS

Tags: Vietnam insurance, Vietnam insurance industry, Vietnam insurance market