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International practice of state support for agricultural risks insurance

Author(s) Prokopchuk O.T., Candidate of Economics, , Uman National University of Horticulture, Ukraine
Category Economics
year 2018 issue Issue № 93. Part 2
pages 41-63 index UDK 368.5:339.7
DOI 10.31395/2415-8240-2018-93-2-41-63 (Link)
Abstract The impact of weather risks on the results of the productive activities of farmers is growing from year to year, and climate change leads to increasingly frequent and intense manifestations of extreme weather conditions in the form of torrential rains, droughts and hurricanes. The catastrophic losses of agricultural producers and the expenditures of budget funds for their coverage could potentially be substantially less, provided there is a functioning model of a national agricultural insurance system with state support, with the mechanisms of interaction between the private sector and the state determined in it. Such a system is able to provide greater financial stability of farmers and the state in cases of catastrophic weather risks. International practice points to the need to develop effective models of insurance for agrarian risks in the format of private-public partnership. In this paper, a study and synthesis of international practice of state support for agricultural risk insurance in the context of key models of public-private partnership in agri-insurance was carried out using economic and statistical research methods, in particular monographic, comparison, tabular, graphical and scientific generalization. According to the results of the study, the main types of models of state support and public-private partnerships functioning in international practice with agri-insurance are identified and characterized: a model of high efficiency of public-private partnership (USA); model with dominant influence of the state (Canada, Israel); model of agricultural insurance through the insurance pool (Spain, Turkey); model of functioning in the market of a "single" agricultural insurer (Austria, Switzerland); a model of minimum state participation in the agricultural insurance system (Germany). Based on the results of the generalization of foreign practice of state aid for the development of agricultural insurance, the classification and characterization of its most common forms has been carried out. The latest results of the study include: subsidizing insurance premiums; subsidizing of insurance payments; compensation of administrative expenses of insurers for provision of insurance services to agricultural producers; financing the development of insurance products; financing of educational and information activities for producers of agricultural products; financing of applied scientific research; subsidizing reinsurance. It was revealed that subsidizing the insurance premium is an effective tool to support the income of the agricultural producer and economic stability in agriculture, whereas direct payments of the state in the event of catastrophic events confirm their inefficiency in the long term. It has been established that payments of a one-time state to provide direct compensation are not systemic, as they are influenced by a number of factors, both economic and political.
Key words insurance, agri-insurance market, state support, agricultural production, agrarian insurance models
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