2011年-世界发展银行全球_Kazakhstan___Agricultural_Insurance_Feasibility_Study_Volume_2_Annexes_352页_13mb

Summary of the Kazakhstan Agricultural Insurance Feasibility Study

Core Content

This document presents a comprehensive feasibility study on the agricultural insurance system in Kazakhstan, focusing on the existing compulsory crop insurance scheme and opportunities for new insurance products. The study was conducted by the World Bank under the Agricultural Post-Privatization Assistance Project (APPAP II) in 2011, with the objective of strengthening the current system and transitioning it toward a more market-based approach.

Main Objectives and Scope

• Assess the risk exposure of agricultural crops, particularly spring wheat, to natural and climatic disasters.
• Review the current compulsory crop insurance program, including its technical, operational, institutional, and financial aspects.
• Propose a phased strategy to make the scheme financially sustainable and market-oriented.
• Identify opportunities for new crop insurance products such as named peril, area-yield index, and weather index insurance.
• Tailor crop insurance to the needs of small farmers in South Kazakhstan, particularly in Tole-bi Rayon.

Key Findings and Main Points

1. Agriculture in Kazakhstan

• Agriculture is a vital socio-economic sector, employing 22% of the labor force and contributing 5.92% to GDP.
• Over 7.3 million people live in rural areas, with a significant portion being small farmers.
• Spring wheat is the main grain crop, grown extensively in northern and central Kazakhstan.

2. Crop Risk Exposure

• Spring wheat production in Kazakhstan is highly vulnerable to drought, hailstorms, early autumn frost, and pests/diseases.
• Drought is the most pervasive risk, with average annual losses estimated at 14.71% of the total value at risk.
• In extreme drought years, losses can reach up to 42% of the expected wheat production value.
• The CRAM (Crop Risk Assessment Model) was used to estimate risk values and expected losses across eight key Oblasts.

3. Current Crop Insurance Scheme

• The compulsory crop insurance scheme was introduced in 2005 under the Compulsory Crop Insurance Law (2004).
• It is based on a public-private partnership (PPP), with the government subsidizing 50% of all claims.
• The scheme is designed to protect small farmers and agricultural laborers from catastrophic losses.
• The policy is known as Loss of Investment Cost (LIC), providing coverage for production costs, not just yields.

4. Technical Challenges

• The LIC policy covers only 20-30% of total production costs on average.
• Premium rates are fixed by law, with minimal flexibility, and are not adjusted based on local risk levels.
• The indemnity valuation is based on harvest prices, which are not pre-agreed, leading to potential disputes and financial exposure for insurers.
• The need for fixed agreed harvest valuation prices is highlighted as a key improvement.

5. Operational Challenges

• The obligatory nature of the scheme prevents proper risk selection and control by insurers.
• Moral hazard is a concern, as farmers may choose to buy higher coverage levels or reduce input costs in anticipation of losses.
• Loss adjustment is costly and time-consuming, involving multiple parties and lacking transparency.
• There is a need to rationalize the loss assessment process and reduce administrative costs.

6. Institutional Challenges

• The current scheme is a public-private partnership (PPP), with the government providing legal and financial support.
• Private insurers are limited in their participation due to poor financial performance and lack of flexibility.
• Farmers’ mutual insurance associations are becoming more prominent, but they are not subject to the same regulatory standards as private insurers.
• There is a call for equal regulation of both private and mutual insurers to ensure financial stability and accountability.

7. Government Support

• The Government of Kazakhstan (GRK) provides financial subsidies to the compulsory crop insurance scheme.
• The Fund for Financial Support for Agriculture (FFSA) covers 50% of all claims, which is a key financial burden on the scheme.
• The Ministry of Agriculture (MoA), Kazhydromet, and National Statistics Agency (ARKS) are key stakeholders in the scheme.

8. Opportunities for New Insurance Products

• Named Peril Crop Insurance (NPCI): Covers specific risks like hail, frost, and pests.
• Area-Yield Index Insurance (AYII): Based on regional yield data, offering more objective and scalable coverage.
• Weather Index Insurance (WII): Uses weather data to determine payouts, reducing the need for on-site inspections.

9. Tailoring Insurance for Small Farmers

• Special attention is given to the needs of small-scale farmers in South Kazakhstan.
• The study proposes customized insurance products and operational linkages to bundle programs for better efficiency and accessibility.
• Tole-bi Rayon in SKO Oblast was selected for in-depth analysis.

Recommendations

• Revise the premium rating methodology to reflect local risk levels.
• Introduce fixed agreed harvest valuation prices to improve predictability and reduce financial exposure.
• Implement a more efficient and transparent loss assessment process.
• Ensure equal regulation of private and mutual insurers to promote financial stability.
• Transition the scheme toward a market-based system through a three-phase strategy.
• Develop new insurance products such as AYII and WII to complement the current LIC policy.
• Tailor insurance solutions to meet the specific needs of small farmers, especially in high-risk areas.

Conclusion

The study highlights the critical role of agriculture in Kazakhstan and the urgent need to improve the current compulsory crop insurance scheme. While the scheme has achieved high penetration due to its mandatory nature, it suffers from poor financial performance, operational inefficiencies, and institutional weaknesses. A phased approach toward a market-based system, combined with the introduction of new index-based insurance products and tailored solutions for small farmers, is proposed to enhance the sustainability and effectiveness of the agricultural insurance system in the country.