The experience of the USA as the world leader in agricultural production is generalized. The current regulatory and legal framework for regulating the insurance mechanism in Ukraine is analyzed. The optimal model, which provides for active participation of the state in support of agricultural risk insurance, commodity producers, products, is proposed. A two-level system of agri-insurance is considered. The first level – insurers, which provide agricultural producers with agricultural insurance services. In this case, the insurer must be a member of the insurance bureau, which is created by insurers; additional financial standards and requirements for the formation of provisions for insurance of agricultural products should be established. The second level is the association of agricultural producers involved in the creation of new and improved existing insurance products, the insurance bureau for agricultural products insurance as the sole association of insurers, and the government agency – the agency that implements the state policy to support the insurance of agricultural products. This level provides financial and informational integration for agricultural producers and insurers and promotes the development of voluntary insurance of agricultural products with state support. The model of functioning of the agricultural insurance system in Ukraine will ensure the formation of mutual trust between insurers, producers of agricultural products and the state.
The formation of such a system will ensure the development of insurance of agricultural products, stability of agricultural production, food security of the state; optimal solution of state tasks in support of agricultural producers in the face of limited budget funds; new approaches to the state management process at the macro level.
The state of the agricultural insurance industry has been studied and evaluated as a crisis due to the poor financial situation of the majority of agricultural producers and the lack of guarantees of timely payment of insurance compensations due to lack of necessary funds from insurance companies.
The features, advantages and disadvantages of insurance products are considered. Insurance from one or more risks provides protection from strictly defined risks and is one of the cheapest. Hardship insurance is the most commonly used product in Ukraine and in other countries. This product is offered to manufacturers at a tariff rate of 0.5 to 2,5% depending on the region and the frequency of risk events. It is recommended to sign combined insurance contracts to protect the crop from hail and storm.
Insurance of income from crop production in the country is practically not developed due to the lack of effective marketing infrastructure in the agricultural sector.
It is expedient to use insurance of expenses for enterprises that grow vegetables, grapes and fruits. They can insure costs at the earliest stages of cultivation. Also, cost insurance is appropriate for enterprises that are laying new vineyards and gardens, when it is necessary to wait 2-4 years before landing at the level of planned productivity.
Insurance costs and yields usually cost the same, and the insurer can save their own money by choosing insurance costs or through the levels of franchise or coverage. It is suggested to conclude insurance contracts without a franchise, since coated products are more understandable and simple. It should be noted that products with large deductibles (40 50%) and / or low coverage (50 60%) are cheaper, but they compensate for only a small part of the cost or revenue of the manufacturer.
It should be noted that the insurance of vegetables, fruits and vineyards is more expensive than insurance of field crops, as the producer can receive significant losses (in monetary terms) even from a risk event on a small area or for a short period of time (hailstones, frostbites). The advantage of such insurance is the possibility of insurance of product quality, which may be of interest to producers of products consumed in fresh form.
Comprehensive insurance usually includes a wide range of risks (from 5 to 15), from which the manufacturer can insure their crops. These insurance products require the insurance of an entire array of crops, but some insurance companies can insure individual fields, subject to compliance with all agrotechnological requirements and the use of high-quality logistical resources. The disadvantage of complex insurance products is a certain difficulty in identifying losses as a result of a risk event.
Index agricultural products have not yet become popular among producers, but they are expected to increase their interest as farmers become accustomed to insurance as a way to protect their crops and incomes. Characteristic properties of index products are the objectivity of the process of assessing the damage and the absence of a franchise. We believe that in the current conditions of the index insurance program it is expedient to offer for field crops. Possible products for this type of insurance include: insurance against late spring frosts, insurance against excessive precipitation or insufficient amount of effective temperatures, early autumn frosts, droughts, temperature stresses, etc. Weathered index products can be offered together with insurance from a hail or a set of identified risks. The disadvantage of weather index products is the «risk of the basis» when an agrarian company may not be able to recover if the weather index is recorded within the normal range.
In order to establish and ensure the efficient functioning of the agro-insurance system in Ukraine, it is advisable to create conditions for the creation of trust and financial literacy of agrarians, rational choice of insurance products in order to increase access to financing, improve the legal framework and implement a model of an effective agricultural insurance system with state support.
Key words: insurance system, insurer, risk, risk management, insurance of agricultural products, insurance products, insurance of expenses, insurance of crop.
RISKS OF AGRICULTURAL PRODUCTS AND THE NEED FOR INSURANCE IN ARMENIA
