OREANDA-NEWS. December 09, 2010. As of the end of November 2010, OJSC IC ROSNO paid over 172 mln roubles1 in connection with losses incurred by agricultural producers due to a weather anomaly in the summer of 2010. The average insurance compensation equalled 2 million roubles, reported the press-centre of ROSNO.

The largest compensations were paid in Southern Okrug and Privolzhsky Okrug. In Volgograd Region, 9 agricultural producers received in total over 82 million roubles. In the Nizhny Novgorod Region, IC ROSNO reimbursed losses of 9 insurants in the amount of 32 mln roubles. Also, substantial insurance compensations were paid to agricultural producers in the Saratov Region (30 mln roubles), Mordovia (6.9 mln roubles), Buryatia (6 mln roubles), and Tatarstan (3 mln roubles).

"The abnormally hot weather prevailing throughout this summer has, indeed, significantly affected winter and spring crops. Fortunately for all, the crop volumes decreased not so catastrophically as could have been expected. Still, the situation we are facing this year has definitely made us understand that agricultural insurance in the agriculturally risky areas is a pressing need for Russia. This opinion is also shared by our country’s leadership. The agricultural sector produces about 4% of GDP, employing over one quarter of the entire Russian population, and is a top priority industry.

The draft law "On State-Supported Agricultural Insurance", which has been approved by the State Duma in the first reading, may radically change the situation in the Russian agricultural insurance system. Under the new draft law, agricultural insurance will be a mandatory precondition for any other state support. This approach will ensure that the funds spent on supporting the agricultural sector will not disappear altogether with the agricultural producers going bankrupt as a result of whatever cataclysms. The new procedure will decrease the load on agricultural producers, as they will pay only 50% of insurance premium (as compared to 100% at present).

However, many issues brought by this draft law still remain unresolved, including accumulation of insurance reserves to pay insurance compensations. The procedure for payment of subsidies is described insufficiently clearly to guarantee full and timely payment of subsidies under all insurance contracts conforming to the relevant preconditions of state support. This type of insurance shall be treated as prudently as possible. The encouraging sign is that insurers are currently involved in discussion of this draft law as it is revised. We, on our part, have already formulated our vision of how this draft law could be improved. ROSNO experts actively participate in various activities aiming to create a viable state-supported insurance arrangement which could become a reliable tool protecting financial interests of the agricultural sector", comments Mr. Leonid Golovanov, head of the Agricultural and Natural Risks Insurance Department of OJSC IC ROSNO.

1 This figure is not final.