Development of insurance services market for agricultural production in conditions of introducing innovations

Abstract

Ukraine's future development is impossible without addressing a number of questions concerning increasing the competitiveness of the agrarian sector and ensuring the country's food security, which can't be achieved without using insurance as a stabilizing factor in agricultural production. At the same time, the priority task is to determine the direction of the insurance services market development for agrarian production in the conditions of innovation and concerning global changes in agrobiocenoses and natural conditions.

When writing the article, the following research methods were used: abstract-logical and dialectical (for theoretical generalizations and conclusions formation); analysis and synthesis (for details of the research object, assessment of the dynamics, structure and effectiveness of changes in risk insurance for agricultural production); historical and logical (to determine the directions of further development).

The research carried out during 1995-2017 indicates an increase in the magnitude of the impact of risks on the reduction of crop yields; in particular, the degree of impact of the aftereffects of plant protection products exceeded the degree of adverse effects of natural conditions. In Ukraine, there are areas where agricultural production is not subject to severe fluctuations and losses due to weather and climatic conditions, and consequently, requirements for farms to production insurance activities must be different and must necessarily take into account the technologies of crops growing. Under such conditions, it is urgent to create attractive insurance conditions for agricultural producers and to ensure the development of competition between insurance companies on a new scientifically based system with the economy cooperation.

Due to the high risks of agrarian production, the crop insurance needs government support. The effectiveness of state subsidies for insurance payments for agricultural crops insurance has been proven by the accelerated growth of insurance volumes during 2005-2008. The functions of the state in the promoting insurance for agricultural production should be priority.  Functions of the state in the process of promoting the insurance of agrarian production should be the priority. The insurance must be voluntary and provide timely implementation of the tasks related to:   development of the methodology of this activity and encouragement of agricultural producers to participate in insurance. Secondly, development of the basic principles and rules of state support for insurance, in particular, mechanisms for compensation of part of insurance contributions and control over the distribution of budget funds; Third,  full protection of the interests of insurers against insurance companies, which will promote more active participation of producers in insurance of their industrial risks.

The analysis of the main quantitative indicators of the insurance market for agricultural production makes it possible to assert that sixty insurance companies form 94% of the market. Contracts of insurance of the future harvest (multi-risk insurance) dominate in the annual distribution of contracts according to the type of insurance product, which indicates an increase in the interest of agrarian commodity producers in products more expensive and complex insurance. Insurance volumes remain insignificant and over the past five years, they constitute an average of 2-3% of the total agricultural crop area in the country, of which more than 60% of the insured area is occupied by winter wheat and another 15% is attributed to winter rape. The most profitable from the point of view of the insurance company was the insurance of winter wheat and corn at the expense of high premiums at insignificant level of payments, at the same time, the insurance of winter rape was highly costly for the insurer.

In order to further develop the insurance market for agrarian commodity producers, it is proposed to take into account, in the insurance contracts, the ability to fully carry out technological operations and preventive measures by agribusiness enterprises, which will help reduce the risk of an insured event or mitigate its negative consequences, in particular after the effect of agrochemicals. As a result, if the enterprise uses highly efficient resource-saving technologies, the terms of insurance will be considerably more favorable for the insured, and the motivation for insurance is relatively more justified.