Экономические науки/ 3.Финансовые отношения.

Lobova Oksana

Graduate student at the department of "insurance and risk managment"

Kyiv National Taras Shevchenko University, Ukraine

Improving of Ukrainian agricultural insurance on the base of foreign experience

The agricultural complex is very important for the economy of almost every country. The risks’ composition in the agricultural sector is due to direct activities or available resources. They are under the influence of certain events and may be damaged or be lost. Insurance is an essential risk management tool that allows you to minimize the loss of farms and make more predictable farmers income. At present, there is need for the development of comprehensive, specialized programs of the manufacturers that rely on subsidized financing of insurance. The main objective of the agricultural insurance in Ukraine is to minimize the negative outcomes in agriculture from natural disaster, the stabilization of incomes of farmers in agricultural production, primarily of strategic crops. The definition of the role of government and insurance companies in the organization of agricultural insurance and building effective and efficient relationships between insurance companies and agricultural producers is topical now.

Prerequisite for the development of agricultural insurance is a mandatory state participation in the organization of insurance, which can result in immediate risk insurance (such form of insurance exists in Greece, Cyprus), and through support for private insurance (Spain, U.S., Canada). The agricultural insurance sectors in Spain, the USA and Canada are the largest and most effective. It is necessary to focus on the international experience while restructuring of Ukrainian agricultural insurance. The use of which will help to reach the best achievements in the organization of agricultural insurance, and possibly to avoid mistakes [4].

International practice offers a variety of options for the insurance system for agricultural complex: providing insurance services to private insurance companies without state aid (Sweden); state participation in reinsurance pools (Spain); subsidizing premiums for some insurance products, such as hail (France, Austria); providing financial assistance to cover catastrophic losses (Germany, Italy, USA, Canada); subsidized insurance programs from many of the risks (multirisk) (Canada, Russia, USA); creation of a special government agency to implement the policy in the sphere of agricultural insurance (Spain, Canada, USA, Russia); creation of an insurance infrastructure [8].

Spain is the country with the most developed system of agricultural insurance in Europe; it is built on consensus between insurers, policyholders and the public administration. In general we can distinguish the following characteristic features of this system: voluntary insurance of agricultural risks, risk coverage in the private insurance companies provide on the basis of shared responsibility (coinsurance), the state supports and develops the system, farmers are actively involved in decision-making on agricultural insurance [2] . In Spain, the insurance companies act as agents. All the signed insurance contracts are transferred to the company (established jointly by the state and private insurers), which administers contracts, assesses the damage and benefits. All risks are reinsured through the state reinsurance company. It is offered more than 100 insurance products for insurance crops and animals. Rates are calculated by the state. [6]

In the U.S. federal system of agricultural insurance combined the multirisk insurance program with the insurance program against catastrophic losses (CAT). All agrarian programs in the USA are developed by the risk managment Agency, which is subordinated to the Department of Agriculture and manages the Federal Crop Insurance Corporation, which collaborates with private insurers. The U.S. government provides several types of financial support for program management of subsidized agricultural insurance: premium subsidizing to producers, compensation administrative costs to insurance companies for the introduction of subsidized insurance products, financial assistance to cover catastrophic losses, the financing of operating costs. The disadvantages of this system include high administrative costs and complexity to control moral hazard [2].

In Canada, there are specialized "Crown corporation" (public company), which are the main providers of financial services and insurance services for the agricultural sector. Private companies offer only a simple insurance products (hail, some risks). Insurance programs may be voluntary for all manufacturers. Farmers can choose from several levels of cover and pricing options for insurance production. The system of financing and insurance of agricultural production is determined by two main features: broad participation of government lending programs, and insurance of farmers and integrated approach to risk management in agriculture [5].

From the experience of countries with advanced agricultural insurance can be seen that the most effective form of organization of insurance is the joint participation of both the state and local budgets, professional associations of manufacturers and insurance companies. The most effective systems of agricultural insurance in countries where there are specialized agencies or partnership programs with private insurance companies. Affiliate programs cost to the government less expensive and allow private companies to add to the rates of premiums and administrative expenses percentage of expected profits. The application of these systems will effectively manage a portfolio of agricultural risks through their regional diversification and transfer of catastrophic risks to the international reinsurance market. The relationship between the insurance companies and the state require special attention. The economic calculations show that the best form of support is the cost cheapening of insurance premiums by providing subsidies. This approach is the most effective. This allows using market mechanisms with more efficient utilization of budget funds. Government should attract farmers to manage risk, encourage them to apply the best innovation technology.

The Ukrainian government should develop a strategic plan for the establishment and development of agricultural risk insurance, the definition of the role of government, the type and level of support. In many countries, authorities are considering the state support of insurance as an investment in agriculture, which prevent the possible future costs and ensure food security and stability [1,2].

For insurance companies, insurance of agricultural risks is a very promising type. But this type of insurance is highly specialized and has specific sales. Optimal construction of the organization of agricultural risks’ insurance is to delegate the sale and appraisal losses on insurance specialists - brokers and agents.

Central role in this system should belong to the government, which will implement the state support of agricultural insurance and harmonize the interests of other participants in the system. It is planned to create the State Agency for Agricultural insurance in the draft concept, whose functions would include providing conditions for cooperation of all participants of agrarian insurance, storage, management and allocation of financial resources, collection and dissemination of data and information, scientific and statistical research in the field of market analysis. The government should ensure the stability of the system, as well as transparency of information. Thus, the draft "Concept of agricultural insurance development in Ukraine" stipulates the creation and development of specialized organizations, which will specialize in agricultural insurance, and in part will remove the burden of organizing and conducting insurance by insurance companies, which will feature the development of insurance products, insurance, and implementation reinsurance. It is also need to create special units that will assist in the development of principles of good insurance practice and solving problems between insurers and insurance companies. This saves time and money for manufacturers and insurers. Such specialized committees exist in Canada (the committee decides 95% of the agricultural insurance disputes), the Agency's risk management in the U.S. and "Agroseguro" Spain [8].

For the effective functioning of insurance it must be created a collective body to manage the agrarian risks. These agencies operate successfully abroad. For example, in Canada, a specialized public institution - the Royal corporation provides services to agriculture, in Spain - The State Agency of Agricultural Insurance, in Russia - Federal Agency for State Support of insurance in the agro-industrial production, in the United States - the Agency's risk management. Taking this into attention, it is appropriate to develop the National Agency of Agricultural Insurance with state support, which will provide conditions for the cooperation of all participants of agricultural insurance, for the accumulation, management, allocation of financial resources and develop a program of state support for agricultural risk insurance.

In order to implement an effective system of agricultural insurance you need to create its institutional components and to develop appropriate legislation acts and to adopt a separate law on insurance. Thus, in some countries there are government programs to support farmers. For example, Canada has a number of government programs to minimize risks and financing farmers: crop insurance program, which includes net income stabilization program and the program of advancing the farmers during spring and fall, the provincial support programs for farmers. It is considered that the Spanish system of agricultural insurance is more advanced, which is better adapted to the European market. In Spain there is the Law "On Combined agricultural insurance" which applies not only to crops but also livestock and forestry.

Bibliography:

1. The Ukrainian Law project "About agricultural insurance» //www.ifc.org;

2. The project of the concept "Development of Agricultural Insurance» //www.agroinsurance. com;

3. Luzan J. "Insurance Risk Management in Agriculture" journal "Agrarian Tyzhden"2010/24

4. Sangadzhieva D. "Crop insurance: Building relationships with the insurance company” http:http://www.agronews.ru/articleview.php?AId=1545

5. Yakubovich, the International Finance Corporation "Special status of the agricultural sector and insurance programs» http://forinsurer.com theme 22

6. http:// agroua.net / - the portal about the agrarian sector of Ukraine.

7. http://www.minagro.gov.ua/ - Ministry of Agrarian Policy of Ukraine.