Three years since Vietnamstarted to introduce agro- insurance policies back in 2011, bottlenecksstill remained and there was plenty of work to be done to protectfarmers from natural disasters.
The assessment was made by DangKim Son, Director of the Institute of Policy and Strategy forAgriculture and Rural Development (IPSARDS), an affiliate of theMinistry of Agriculture and Rural Development (MARD).
Son was speaking at a national seminar on agro-insurance in the capital city on November 13.
"Though in recent years, agriculture has played a role as a mainstayof the national economy during difficult times, it has faced numerousrisks due to natural disasters including floods, droughts andepidemics." Son said.
"Agro-insurance is a shield to protect andsupport farmers and help them overcome difficulties and challenges inagricultural production. One of the most effective measures would be topromote the public-private-partnership model in agro-insurance," Sonadded.
Son was full of praise for the government's efforts to limit the damage caused by Typhoon Haiyan last week.
Due to the impacts of climate change, powerful storms like that werelikely to become more frequent, and Vietnam's geographical locationmeant it was one of several countries in the world hit hardest byclimate change, he said.
That's why the difficult task for theagriculture sector now is to help farmers to continue developingagricultural production while improving their product competitivenessinside and outside the country.
As a result, protecting farmersfrom the negative impacts of natural disasters has become ever moreimportant, and agro- insurance can play an important role in helpingfarmers to overcome the difficulties and challenges left by naturaldisasters and epidemics.
Addressing the participants, Tran ThiDieu Hang, head of the non-life insurance unit from the InsuranceSupervision Authority Department under the Ministry of Finance, said thepilot project had been implemented in 20 provinces and cities, wherecrops, livestock and aqua culture had been insured.
Hang saidthat the Government had offered to pay 100 percent of the premium forpoor households; 90 percent for near poor households and 60 percent forothers.
"By the end of August this year, nearly 317, 000households were participating in the insurance scheme, and the totalpremium revenue had reached 339.6 trillion VND (16 billion USD) ," Hangsaid.
She conceded that over the past three years, the project faced many difficulties and challenges for a variety of reasons.
To start with, agro-insurance was a totally new concept that was beingrolled out on a large scale across 20 provinces and cities nationwide.In addition, insurance companies had struggled to provide services orcarry out risk assessments.
"In 2012, the domestic aquacultureindustry was hit hard. As a result, insurance companies sufferedsubstantial losses and were unable to sign reinsurance contracts in2013," she said.
"To cope with the situation, MOF and MARD agreedto increase premiums and negotiate with companies so that they acceptedreinsurance at 82.93 percent liability to continue the pilotprogramme," Hang revealed.
Tran Cong Thang, project manager anddirector of the Strategy and Policy Research Division of IPSARD, said acertain amount of success had been recorded in the pilot project.
"This should encourage farmers to participate in future agro-insurance schemes," Thang said.
However, he agreed that difficulties remained and fresh challenges layahead, particularly the slow issuance of documents to implement thePrime Minister's Decision 315.
"Under the document, the pilotproject was meant to run for three years, but we were delayed by 18months, our implementation time was cut by half," Thang said.
Helamented the complicated claim procedures, particularly thecertification for production practices, aquacultural practices andsampling for disease detection.
"In some cases, it took shrimp farmers in southern Bac Lieu Province 10 months to receive compensation," Thang cited.
From Thang's point of view, another factor that hindered thedevelopment of agro-insurance in Vietnam was the loose alliancebetween the State, insurance companies and farmers.
He agreedthat at present in Vietnam , the public-private partnership hadachieved some success in commodities such as in coffee, tea, vegetables,maize, soybean and financial groups.
It could be a good model for the agro-insurance industry too, Thang added.
Gonzalo Airiz Gervas, deputy director of the Public AgriculturalInsurance entity in Spain , shared his country's experiences in thefield, particularly with the PPP model.
He said that for the PPPmodel to work, the Government had to play a very important role inmaking sure there was transparency in public management.
In thecontext of climate change, the PPP model would help to alleviate thegovernment's burden from damage caused by natural disasters. In theirannual budget allocation, the Government should set aside a certain sumfor agro- insurance.
Meanwhile, he said, private enterprisesinvolved in agro- insurance would also play an important role by usingtheir expertise in the field.
However, the farmers' participation was the most important thing because they were the key players in the game.
Alberto Garrido, director of the Research Centre for the Management ofAgricultural and Environmental Risks at the Technical University ofMadrid, said the PPP model was an effective option to makeagro-insurance a success.
Based on international experience, Garrido listed the basic requirements for Vietnam to start a PPP model.
They were adequate market regulations; a balanced institutionalframework; accurate statistics on public private partnerships; solidactuarial techniques; a large pool of potentially interested farmers andstarting off with simple insurance policies.-VNA
