NATIONAL RICE CROP INSURANCE PROGRAM
KELOMPOK KERJA ASURANSI PERTANIAN KEMENTERIAN PERTANIAN 2014
AUTP (Asuransi Usaha Tani Padi)
Rice Crop Insurance – main features • Indemnity based, named perils Rice Crop insurance; • More models to develop: (1) Indemnity based, (2) Indemnity Multi perils based, (2) Yield index (MPCI) based, (3) Revenue index based, (4) Weather index based; • Perils covered (limited to) Flood, Draught, 5 types of Pest, and 5 type of Disease. • Payout Rp 6.000.000,-/Ha any one planting season. • Claims condition: 75% damage intensity, 75% damaged acreage, 10 days Time Excess. • Rate of premium 3% flat. • Insured : any one Farmers’ Group as any one risk. • Insurer : PT Asuransi Jasa Indonesia (Jasindo)
AUTPPilot (Asuransi Usaha Project II - Tani JICAPadi) Rice Crop Insurance – Pilot Project
Farmers’ Group
Farmers
Acreage (Ha)
Self-Farmers Premiums (Rp)
Jombang
117
1.140
721
25.956.324
103.824.679
129.781.003
Nganjuk
72
1.833
709
25.527.960
102.111.840
127.639.800
Total
189
2.973
1.430
51.484.284
205.936.519
257.420.803
Regency
JICA Premiums Total Premiums Contribution (Rp) (Rp)
Pilot project II JICA (Underwriting Result) Regency
Premiums (Rp)
Commissions (Rp)
Claims (Rp)
Underwriting Results (Rp)
Jombang
129.781.003
Nil
105.540.000
24.241.003
Nganjuk
127.639.800
Nil
Nil
127.639.800
Total
257.420.803
Nil
105.540.000
151.880.803
Note: Claims. Cause of loss Rat attack in Bareng sub-regency total claimable damage 17,9 ha
PILOT PROJECT II (JICA) – Implementation • Planting seasons (October 2013 – March 2014) • Preparation activity 1 – 2 months before planting date • Different locations, planting dates, culture, agro-eco system • Stage 1 : MOA determined locations and coordination with Province and Regencies • Stage 2 : POKJA and JICA to work out plan and set schedule • Stage 3 : On site gatrhering, socialization and FGD • Stage 4 : Jasindo agency to register farmers group • Stage 5 : Premiums payment and insurance Policy issuance
(1) PILOT DECISION & SOCIALIZATION MINISTRY OF AGRICULTURE Ditjen Agri Infrastructure
Pilot Project and location decision Considering risk exposure aspect, cooperative aspect and general interest of farmers.
WORKING COMMITTEE, LOCAL AGRIOFFICE & JICA
Coordination with local agri-office to identify location, risk exposure aspects, farmers general interest, and estimated planting season. Coordination to set time schedule, on site activity, necessary logistics, documentation and prospective Insured names and addresses.
WORKING COMMITTEE. LOCAL AGRIOFFICERS, JICA & JASINDO
ON-SITE Socialization to Farmers and Group/Farmers attended by local agri officers and Extension workers
WORKING COMMITTEE On Agriculture Insurance
Response
Not clear No
FARMERS GATHERED & REGISTRATION
(2) INSURANCE REGISTRATION INSURANCE AGENT, JASINDO, LOCAL AGRI-OFFICERS
FARMERS’ GROUPS & FARMERS
INSURANCE AGENT
1. Meet Farmers, Farmers groups at sub-district 2. Get them to understand insurance program. 3. Open discussion and direct guidance. 1. Understand and interested to participate. 2. Agreed to follow insurance “rule of game” 3. Agreed to pay 20% self-farmer premium. 1. 2. 3. 4.
Distribute Proposal Form; Explain its function and how to fill in. Advise them to pay 20% self-farmer premium. Advise Extension workers to help collect premiums from each participating farmer.
SELF-FARMER PREMIUMS COLLECTION
(3) SELF-FARMER PREMIUMS COLLECTION FARMERS & FARMERS’ GROUP
1. Farmers completed Proposal Forms with copy ID and sign it. 2. Farmer’s Group co-sign completed Proposal Forms. 3. Extension workers co-signed completed Proposal Forms.
LOCAL EXTENSION WORKERS & FARMERS’ GROUPS
1. Meet each farmer to collect self-farmer premium in cash. 2. Transfer all collected premiums to Jasindo bank account. 3. Fax/email transfer proof to Jasindo and Insurance Agent.
INSURANCE AGENT
1. Recap all Proposal Form including 20% premium payment. 2. Coordinate with Local Extension workers to final checking. 3. Send final Recapitulation to Jasindo for Policy issuance.
JASINDO Surabaya Branch
1. Verify Final Recapitulation from Insurance Agent. 2. Verify proof of self-farmer premiums with banks.
INSURANCE POLICY ISSUANCE
(4) INSURANCE POLICY ISSUANCE JASINDO Surabaya Branch
INSURANCE AGENT
JICA Indonesia
INSURANCE AGENT
1. Prepare Insurance Policies for each Farmers Group 2. Prepare Invoice for total of 80% premiums. 3. Send Policies and Invoice to Insurance Agent. 1. Sort out Policies and send them to Farmers’ Groups. 2. Check Invoice and send it to JICA with Recap and Policies samples with attachment of Policy schedule.
1. Transfer 80% premiums to account of nominated Expert. 2. Nominated Expert further transfer fund to Insurance Agent. 1. Transfer fund to Jasindo Surabaya bank account. 2. Collect all receipts from Jasindo, Insurance Agent and nominated Expert all to be submitted to JICA. 3. Organize and administer all data and document.
POST CONTRACT ACTIVITIES
(5) POST CONTRACT ACTIVITIES INSURANCE PRINCIPLES & POLICY CONDITIONS
1. Insureds under common duty to exercise reasonable skill and take reasonable care (good agricultural practices); 2. Insureds under contractual duty to notify insurer, control damage and do necessary actions to prevent further loss.
WORKING COMMITTEE, JASINDO & JICA Indonesia
1. Prepare and execute training and education program. 2. Deploy appropriate media including books, leaflet, and audio visual. 3. Coordinate with regency and district Agriculture offices for its implementation.
FARMERS & FARMERS’ GROUP
1. 2. 3. 4.
Participate in the training and education; Exercise good agricultural practices, as if the risk not insured; Notify Jasindo/Insurance Agent on any potential loss; Do necessary actions to control and minimize loss.
CLAIMS ANTICIPATION PROGRAM
(6) CLAIM ANTICIPATION PROGRAM JASINDO AND INSURANCE AGENT
1. Monitor climate in general and its potential impact to insured rice farms. 2. Communicate with Extension workers to anticipate any impact.
LOCAL EXTENSION WORKERS (POPT/PHP TASK FORCES)
1. 2. 3. 4.
Exercise duties to help monitor climate and its impact. Report to Jasindo/Insurance Agent on any symptom of loss. Assist Loss Adjuster inspecting and adjusting damage. Assist Farmers in reporting claims.
INSURANCE AGENT
1. 2. 3. 4.
Give training and education to farmers on risk control. Assist where appropriate in adjusting and processing claims. Construct statistics of Risk Profile and Loss Profile. Help study on risk modelling and product development.
AGRICULTURE INSURANCE - CHALLENGES FOR GROWTH • Affordability • Motivation • Distribution • Rating integrity • Loss frequency and severity • Efficiency of transaction • Transparency process • Classification
CHALLENGES FOR GROWTH • Affordability • Petani memiliki dana lebih? • Asuransi sepenuhnya komersiel? • Motivation • Asuransi Compulsory/Voluntary? • Distribution • Ada Subsidi atau dukungan keuangan • Rating integrity lain? • Loss frequency and severity • Efficiency of transaction • Transparency process • Classification
CHALLENGES FOR GROWTH • Affordability • Motivation • Bencana gagal panen sebelum2nya? • Distribution • Fenomena El-Nino (kekeringan 1987/8 - 426.000 Ha) • Rating integrity• Prasyarat utk pembiayaan asuransi? Akses terhadap bantuan langsung pasca bencana • Loss frequency •and severity (Program BP3)? • Efficiency of transaction • Transparency process • Classification
CHALLENGES FOR GROWTH • Affordability • Motivation • Distribution • Menggunakan keagenan umum? • Rating integrity• Menggunakan tenaga Extension workers? • Loss frequency •and severity Menggunakan sistem keagenan khusus? • Menggunakan sistem elektronik (on-line)? • Efficiency of transaction • Transparency process • Classification
CHALLENGES FOR GROWTH • Affordability • Motivation • Distribution • Rating integrity • Aspek risiko apa yang belum diketahui? • Loss frequency and• severity Apakah Data bisa dimanufaktur? • Berapa harga sebuah ketidak-pastian? • Efficiency of transaction • Transparency process • Classification
CHALLENGES FOR GROWTH • Affordability • Motivation • Distribution • Rating integrity • Loss Frequency and Severity • Efficiency of transaction • Pengaruhnya terhadap Dana cadangan asuransi? • Tingkat dukungan permodalan? • Transparency process • Bagaimana struktur reasuransinya? • Classification
CHALLENGES FOR GROWTH • Affordability • Motivation • Distribution • Rating integrity • Loss frequency and severity • Efficiency of transaction • Harga ketidak-pastian (uncertainty)? • Transparency process • Volume minimum/Law of Large Number? • Classification • Biaya akuisisi, administrasi dan umum?
CHALLENGES FOR GROWTH • Affordability • Motivation • Distribution • Rating integrity • Loss frequency and severity • Efficiency of transaction • Transparency process • Indemnity based atau Index based? • Classification • Tarif suku premi yang seimbang? • Percaya dengan proses kerja asuransi?
CHALLENGES FOR GROWTH • Affordability • Motivation • Distribution • Rating integrity • Loss frequency and severity • Efficiency of transaction • Pengalihan risiko (risk transfer)? • Transparency process • Harga pengalihan murni? • Classification • Asuransi atau derivatives?
3% PREMIUM – Legal consideration UU No 2/1992 (Usaha Perasuransian) Pasal 20: (1) Premi harus ditetapkan pada tingkat yang mencukupi, tidak berlebihan, dan tidak diterapkan secara diskriminatif.
(2) Tingkat premi sebagaimana dimaksud dalam ayat (1) dinilai tidak mencukupi apabila: a. Sedemikian rendah sehingga sangat tidak sebanding dengan manfaat yang diperjanjikan dalam polis asuransi yang bersangkutan; b. Penerapan tingkat premi secara berkelanjutan akan membahayakan tingkat solvabilitas perusahaan;
c.
Penerapan tingkat premi secara berkelanjutan akan merusak iklim kompetisi yang sehat.
3% PREMIUM – Legal consideration UU No 2/1992 (Usaha Perasuransian) Pasal 20: (3) Tingkat premi sebagaimana dimaksud dalam ayat (1) dinilai berlebihan apabila sedemikian tinggi sehingga tidak sebanding dengan manfaat yanbg diperjanjikan dalam polis asuransi yang bersangkutan. (4) Penerapan tingkat premi sebagaimana dimaksud dakam ayat (1) dinilai bersifat diskriminatif apabila tertanggung dengan luas penutupan yang sama serta dengan jenis dan tingkat risiko yang sama dikenakan tingkat premi yang berbeda.
UU No 2/1992 (Usaha Perasuransian) Pasal 21: (1)
Penetapan tingkat premi asuransi harus didasarkan pada perhitungan analisa risiko yang sehat.
(2)
Ketentuan lebih lanjut mengenai ayat (1) nditetapkan oleh Menteri.
3% PREMIUM – Legal consideration KMK No. 422/KMK.06/2003 Pasal 19: (1) Perhitungan tingkat premi harus didasarkan pada asumsi yang wajar dan praktek asuransi yang berlaku umum. (2) Penetapan tariff premi asuransi kerugian harus dilakukan dengan mempertimbangkan sekurang-kurangnya: a. Premi murni yang dihitung berdasarkan profil kerugian (risk and loss profile) jenis asuransi yang bersangkutan untuk sekurang-kurangnya 5 (lima) tahun; b. Biaya akuisisi, biaya administrasi dan biaya umum lainnya.
3% PREMIUM – Basic Assumption 1. 2. 3. 4. 5. 6. 7.
Statistics time series PUSO 2003 – 2012; Burning Cost ratio; Risk Premiums Loading for data inaccuracy; Loading for Loss adjusted expenses; Loading for Catastrophe exposure (“El Nino factor”); Loading for Insurer’s Operasional (Biaya Akuisisi, Administrasi, Umum);
RATE OF PREMIUM FORMULATION RISK PREMIUM a. Burning Cost
1.454%
b. Data inaccuracy
2.5%
0.036%
c. Loss adjusted expenses
10%
0.145%
d. Contingency reserves
10%
0.145%
TOTAL RISK PREMIUMS
1.781%
INSURER'S LOADING a. Acquisition Cost
25%
0.445%
b. Administration Cost c. General Cost
25% 30%
0.445% 0.534%
TOTAL INSURER'S LOADING RATE OF PREMIUM
1.425% 3.205%
RATE TESTING • HARVEST FAILURE RATIO : TOTAL HARVEST FAILURE (Ha) / TOTAL HARVEST ACREAGE (Ha) x 100% • LOSS RATIO : TOTAL COST OF HARVEST FAILURE / TOTAL COST OF HARVEST ACREAGE x 100% Total Cost of Harvest Failure = Harvest Failure x Rp 6.000.000,Total Cost of Harvest Acreage = Harvest Acreage x Rp 180.000,-
RICE CROP PRODUCTION CENTER 2003 - 2012 NO
PROVINSI
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
1
NAD
332,763
313,422
348,875
395,579
379,434
407,366
232,363
302,715
302,715
302,715
2
Sumatera Utara
806,753
668,630
832,681
860,208
696,465
764,777
782,969
656,723
656,723
656,723
3
Sumatera Barat
403,834
437,292
425,525
529,538
418,916
436,632
453,869
466,732
466,732
466,732
4
Riau
142,082
144,630
133,607
191,371
24,564
125,087
80,216
166,106
166,106
166,106
5
Jambi
156,467
156,035
150,872
155,804
123,544
156,960
155,248
146,951
146,951
146,951
6
Sumatera Selatan
642,698
615,281
657,465
699,870
691,435
742,810
756,286
862,889
862,889
862,889
7
Bengkulu
117,341
108,317
108,286
100,815
120,620
135,709
149,394
119,811
119,811
119,811
8
Lampung
538,090
492,385
517,077
552,186
515,676
498,572
546,909
433,605
433,605
433,605
5,411
7,654
5,213
11,295
4,584
12,647
5,001
3,542
3,542
3,542
-
108
125
-
177
135
270
270
270
9
Kep. Bangka Belitung
10
Kep. Riau
11
DKI Jakarta
1,771
2,450
2,446
2,347
1,639
1,314
344
1,755
1,755
1,755
12
Jawa Barat
1,925,389
1,848,904
1,980,990
2,042,014
2,058,262
2,003,736
1,982,368
2,151,501
2,151,501
2,151,501
13
Jawa Tengah
1,724,063
1,567,572
1,711,537
1,995,738
1,843,305
1,830,695
1,621,726
1,892,411
1,892,411
1,892,411
14
DIY Yogyakarta
134,183
129,868
135,812
152,850
114,027
147,822
112,779
193,358
193,358
193,358
15
Jawa Timur
1,828,679
1,606,862
1,783,369
2,076,779
1,847,458
2,033,180
1,549,261
2,401,010
2,401,010
2,401,010
16
Banten
397,638
362,479
341,421
362,421
389,908
431,157
384,969
527,194
527,194
527,194
17
Bali
152,490
147,881
146,522
178,664
147,409
182,222
143,283
159,013
159,013
159,013
18
Nusa Tenggara Barat
358,051
309,599
341,076
374,569
327,671
430,280
306,900
434,197
434,197
434,197
19
Nusa Tenggara Timur
175,548
200,971
190,577
228,092
122,476
155,749
256,063
114,599
114,599
114,599
20
Kalimantan Barat
352,951
398,401
393,354
381,288
299,389
383,468
276,644
406,189
406,189
406,189
21
Kalimantan Tengah
230,604
220,798
222,947
282,626
96,773
243,215
240,172
280,718
280,718
280,718
22
Kalimantan Selatan
445,683
438,560
467,991
714,156
469,844
518,404
446,671
463,778
463,778
463,778
23
Kalimantan Timur
138,030
135,010
157,083
149,711
97,569
108,886
81,726
117,951
117,951
117,951
24
Sulawesi Utara
92,606
83,847
108,976
123,221
92,567
121,440
141,810
121,542
121,542
121,542
25
Sulawesi Tengah
189,537
182,121
182,685
242,358
201,773
201,814
214,843
207,692
207,692
207,692
26
Sulawesi Selatan
876,445
770,595
805,343
724,203
884,363
898,095
808,078
1,092,968
1,092,968
1,092,968
27
Sulawesi Tenggara
96,149
86,333
98,564
136,981
106,647
104,963
110,210
124,594
124,594
124,594
28
Gorontalo
39,407
38,196
47,163
41,607
48,242
46,636
42,555
64,928
64,928
64,928
29
Sulawesi Barat
-
66,779
77,841
71,366
72,731
96,273
96,273
96,273
30
Maluku
8,946
17,203
13,738
10,933
12,305
22,596
16,962
10,933
10,933
10,933
31
Maluku Utara
17,160
14,315
17,170
23,433
10,019
22,717
13,628
23,433
23,433
23,433
32
Irian Jaya barat
-
7,285
8,381
5,667
8,548
8,658
8,381
8,381
8,381
33
Papua
33,884
13,888
23,268
25,005
21,442
37,962
26,039
25,005
25,005
25,005
TOTAL
12,364,653
11,519,499
12,425,805
13,852,009
12,173,993
13,287,002
12,020,810
14,078,767
14,078,767
14,080,779
-
-
-
-
“AS IF” LOSS RATIOS 2003 - 2012 NO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
PROVINSI
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
NAD Sumatera Utara Sumatera Barat Riau Jambi Sumatera Selatan Bengkulu Lampung Kep. Bangka Belitung Kep. Riau DKI Jakarta Jawa Barat Jawa Tengah DIY Yogyakarta Jawa Timur Banten Bali Nusa Tenggara Barat Nusa Tenggara Timur Kalimantan Barat Kalimantan Tengah Kalimantan Selatan Kalimantan Timur Sulawesi Utara Sulawesi Tengah Sulawesi Selatan Sulawesi Tenggara Gorontalo Sulawesi Barat Maluku Maluku Utara Irian Jaya barat Papua TOTAL
53% 14% 13% 150% 703% 224% 0% 45% 0% 0% 0% 243% 97% 15% 34% 48% 2% 12% 0% 72% 1% 43% 0% 0% 0% 148% 5% 1% 0% 0% 0% 0% 0% 99.5%
87% 9% 4% 133% 290% 1% 1% 14% 0% 0% 0% 49% 7% 16% 10% 8% 1% 13% 214% 25% 1% 97% 1% 9% 1% 45% 179% 9% 0% 5% 0% 0% 2% 33.0%
161% 21% 7% 11% 47% 284% 62% 298% 0% 0% 0% 22% 55% 26% 13% 7% 4% 78% 787% 10% 125% 80% 11% 0% 1% 14% 1% 3% 0% 0% 0% 0% 0% 69.2%
215% 40% 5% 15% 10% 19% 0% 7% 0% 0% 6% 143% 33% 3% 15% 66% 0% 6% 1% 8% 2% 66% 5% 16% 10% 120% 43% 8% 0% 0% 0% 0% 0% 51.1%
166% 13% 4% 163% 40% 12% 5% 1% 0% 0% 0% 87% 49% 19% 30% 63% 0% 45% 93% 8% 12% 22% 0% 2% 36% 46% 2% 1% 0% 8% 0% 1% 3% 43.8%
59% 10% 7% 95% 47% 7% 9% 84% 0% 0% 0% 149% 51% 5% 37% 121% 0% 4% 0% 47% 1% 12% 9% 0% 22% 19% 7% 23% 37% 0% 0% 4% 24% 50.736%
72% 7% 10% 59% 20% 6% 2% 26% 0% 0% 775% 23% 42% 73% 23% 55% 2% 15% 0% 40% 1% 4% 0% 0% 19% 43% 18% 19% 100% 0% 1% 0% 1% 24.9%
26% 6% 6% 3% 106% 45% 0% 101% 0% 0% 28% 15% 22% 29% 15% 4% 0% 79% 135% 1% 49% 35% 19% 6% 5% 71% 15% 323% 7% 186% 0% 0% 1% 29.6%
82% 4% 10% 61% 37% 10% 4% 68% 0% 0% 0% 25% 21% 48% 54% 13% 4% 7% 23% 8% 4% 9% 18% 1% 2% 53% 45% 18% 22% 0% 5% 1% 31% 29.1%
142% 9% 5% 16% 45% 5% 1% 72% 0% 0% 0% 7% 24% 6% 10% 95% 4% 20% 6% 10% 33% 12% 16% 0% 6% 28% 47% 10% 19% 27% 4% 0% 0% 21.5%
“AS IF” AVERAGE UNDERWRITING RESULTS NO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
PROVINSI NAD Sumatera Utara Sumatera Barat Riau Jambi Sumatera Selatan Bengkulu Lampung Kep. Bangka Belitung Kep. Riau DKI Jakarta Jawa Barat Jawa Tengah DIY Yogyakarta Jawa Timur Banten Bali Nusa Tenggara Barat Nusa Tenggara Timur Kalimantan Barat Kalimantan Tengah Kalimantan Selatan Kalimantan Timur Sulawesi Utara Sulawesi Tengah Sulawesi Selatan Sulawesi Tenggara Gorontalo Sulawesi Barat Maluku Maluku Utara Irian Jaya barat Papua TOTAL
AVG L/R
COMB RATIO
PROF/LOSS
106% 13% 7% 71% 134% 61% 8% 72% 0% 0% 81% 76% 40% 24% 24% 48% 2% 28% 126% 23% 23% 38% 8% 3% 10% 59% 36% 41% 19% 23% 1% 1% 6% 45%
146.3% 53.3% 47.1% 110.5% 174.5% 101.4% 48.5% 111.6% 40.0% 40.0% 120.9% 116.1% 80.1% 63.9% 63.9% 87.8% 41.6% 67.9% 165.8% 62.9% 62.8% 78.0% 48.0% 43.4% 50.3% 98.8% 76.2% 81.4% 58.6% 62.5% 41.1% 40.5% 46.2% 85.2%
-46.3% 46.7% 52.9% -10.5% -74.5% -1.4% 51.5% -11.6% 60.0% 60.0% -20.9% -16.1% 19.9% 36.1% 36.1% 12.2% 58.4% 32.1% -65.8% 37.1% 37.2% 22.0% 52.0% 56.6% 49.7% 1.2% 23.8% 18.6% 41.4% 37.5% 58.9% 59.5% 53.8% 14.8%
LOSS FREQUENCY & SEVERITY 2003-2012 900% 800% EG.: Jambi 2003, claims exceed premium by 703%
700% 600%
500% 400% 300%
EG.: West Java in 2003, claims exceed premium by 243%
200% 100% 0%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
NAD Sumatera Utara Sumatera Barat Riau Jambi Sumatera Selatan Bengkulu Lampung Kep. Bangka Belitung Kep. Riau DKI Jakarta Jawa Barat Jawa Tengah DIY Yogyakarta Jawa Timur Banten Bali Nusa Tenggara Barat Nusa Tenggara Timur Kalimantan Barat Kalimantan Tengah Kalimantan Selatan Kalimantan Timur Sulawesi Utara Sulawesi Tengah Sulawesi Selatan Sulawesi Tenggara Gorontalo Sulawesi Barat Maluku Maluku Utara Irian Jaya barat Papua
“AS IF” LOSS RATIOS 2003 - 2012
900%
800%
700%
600%
500%
400%
300%
200%
100%
0%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sumatera Barat Riau Jambi Sumatera Selatan Bengkulu Lampung Kep. Bangka Belitung Kep. Riau DKI Jakarta Jawa Barat Jawa Tengah DIY Yogyakarta Jawa Timur Banten Bali Nusa Tenggara Barat Nusa Tenggara Timur Kalimantan Barat Kalimantan Tengah Kalimantan Selatan Kalimantan Timur Sulawesi Utara Sulawesi Tengah Sulawesi Selatan Sulawesi Tenggara Gorontalo Sulawesi Barat Maluku Maluku Utara Irian Jaya barat Papua
-50% Sumatera Utara
0% NAD
“AS IF” UNDERWRITING RESULTS (10 YEAR AVERAGED)
200%
150%
100%
50%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
-100% AVG L/R COMB RATIO PROF/LOSS
WHY PREMIUM SUBSIDY? • Farmers’ income is more and more in danger due to causes of climate change. • Frequency of damages in agriculture is the highest in the economy. • Brings higher penetration. • The state benefits from a stable agriculture sector with an insured agriculture. • The state does not have to provide ad-hoc payments after damages. • Subsidies are in the long run cheaper for the state.
SUBSIDY IN OTHER COUNTRIES COUNTRY
YEAR STARTING
INSURANCE INSTITUTION
PREMIUM SUBSIDY
SUBSIDIY FOR R&D
SUBSIDY FOR REINSURANCE
USA
1930
Private
√
√
√
Canada
1970
Public
√
√
√
Spain
1980
Pool/Consortium
√
X
√
Portugal
1979
Private
√
X
√
Italy
1970
Private
√
X
X
France
2005
Private
√
X
X
India
1985
Public
√
X
X
SUBSIDY IN OTHER COUNTRIES COUNTRY
YEAR STARTING
INSURANCE INSTITUTION
PREMIUM SUBSIDY
SUBSIDIY FOR R&D
SUBSIDY FOR REINSURANCE
Philippines
1980
Public
Ya
Tidak
Tidak
China
1950
Pool/Koasuransi
Ya
Tidak
Ya
Brazil
1950
Pool/Koasuransi
Ya
Tidak
Ya
Mexico
1990
Swasta
Ya
Ya
Ya
Chile
2000
Pool/Koasuransi
Ya
Ya
Tidak
Colombia
2000
Swasta
Ya
Tidak
Tidak
S. Korea
2001
Swasta
Ya
Tidak
Ya
SUBSIDY SIZE? • • • • • •
USA Canada Europe Brazil Japan Philippines
• France • Turkey
: 59% = US$ 2,34 billion (2005) : 50% = US$ 350 million (2005) : 32% = US$ 600 million (2005) : US$ 100 million (2009) : 50% = US$ 640 million every year : low risk medium risk high risk Farmer : 1.46% 2.91% 4.31% Bank : 2.00% 2.00% 2.00% Negara : 5.90% 5.90% 5.90% 9.36% 10.81% 12.27% : subsidy commenced in 2005 : subsidy commenced in 2005
RICE CROP INSURANCE– India case Exposure
$ 50,000,000
$ 50,000,000
$ 50,000,000
Loss Cost (LC)
5%
$ 2,500,000
5%
$ 2,500,000
5%
$ 2,500,000
Uncertainty
5%
$ 125,000
20%
$
500,000
40%
$ 1,000,000
Fixed RI cost
$ 106,250
$
200,000
$ 325,000
Risk Premium
$ 2,731,250
$ 3,200,000
$ 3,825,000
Acquisition
15%
15%
$
480,000
Administration
5%
5%
$ 160,000
15%
$ 573,750
5%
$ 191,250
Total Premium
$ 3,277,500
$ 3,840,000
$ 4,590,000
Gross rate
6.56%
7,68%
9.18%
% above LC
131.10%
153.60%
183.60%
AGRICULTURE INSURANCE – China case • 1950 – agri insurance first launched but quickly suspended. • 1980 – insurance resumed. • 2004 – official government policy to support insurance. • 2007 – subsidies and tax concessions commence; - Financial subsidy accounts for 85% of premium, - 98% of insurance is subsidies, - Agriculture insurance exempt from business tax and stamp duty, - Favorable tax treatment of agriculture insurance profits and contribution to catastrophe risk fund. • 2012 – new agricultural insurance regulations.
CONCLUSIONS • Agriculture under increasing pressure: - Demand for products increasing but finite land and water. - Technology transfer and risk management key to success • Leverage: - Understand your buyer and seller - Learn from the experience of others, take the best and modify the rest. • Long term strategy: - Start how you intend to finish – data is critical - Put structures in place now to help in the future • WORKING GROUP on Agriculture Insurance (MoA): - Committed to develop national agriculture insurance program. - Welcome partnership as it will maximize results.
Thank you
