In partnership with

IFC Advisory Services in Europe and Central AsiaUkraine Agri-Insurance Project

Developing Agri-Insurance in Ukraine

Iryna GolovkoDeputy Project Manager

IFC Ukraine Agri-Insurance Project

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GOVERNMENT

MINISTRY OF AGRARIAN

POLICY AND FOOD

THE PARLIAMENT

THE STATE REGULATOR

PRIVATE SECTOR

INSURANCE COMPANIES (15)

AGRARIAN INSURANCE POOL (4)

REINSURANCE COMPANIES

PRODUCERS

BANKS, MFIS, INPUT

SUPPLIERS, VALUE CHAINS

Law on State program to support agri-insurance adopted in 2012

Separate mandatory license for agri-insurance introduced

State program on licensing and certification of loss adjustors launched

Agrarian Insurance Pool established

Standard insurance products for 10 crops developed and introduced in

the market

Wide-scale public awareness campaign reached more than 40% of

Ukrainian producers

Annual market analysis performed

Banks use agri-insurance as quasi-collateral

Unique Experience to Develop Agri-Insurance in Ukraine

first product launched

5 products launched

4 products launched

subsidies increase

subsidies initiated

9 month initial product development

new law on agri-insurance

ACTUAL SALES

2008 2009 2010 2011 2012 20130

200

400

600

800

1000

1200

Liab

ility

, mill

ions

USD

2009

A2F linkage Insurance & Banks

2010 2011 2012 2013

ESTI

MAT

ED

ESTI

MAT

ED

UKRAINE After project launch, a well designed program will grow.

IFC experience in Ukraine can be replicated (shown above)

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Multi-Peril Crop Insurance (MPCI) Products developed by the IFC Project and Implemented in the Market

(І) INSURANCE OF CROPS AND FUTURE YILED for THE WHOLE PRODUCTION CYCLE

Winter wheat / Winter barleyWinter rye / Winter triticaleWinter rapeseeds (canola)

(ІІ) INSURANCE OF FUTURE YILED for SPRING-SUMMER PERIOD

Winter wheat / Spring wheatWinter barley / Spring barleyWinter rye / Winter triticaleWinter rapeseeds (canola)CornSunflowerSugar beets

(ІІI) INSURANCE OF CROPS for WINTER PERIOD

Winter wheat / Winter barleyWinter rye / Winter triticaleWinter rapeseeds (canola)

Make 1/3 of the Ukrainian market in 2012

***blue are the crops currently modified according to the requirements of the state program

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Our team commits 30% of work toGlobal Index Insurance Facility (GIIF)

Weather index: Payout is based on specific weather parameters (such as rainfall level or temperature).

Area-yield index: Payout is based on average yield of an insured unit such as a county or district, not the yield of individual farmers.

Hybrid insurance: Includes index and indemnity based insurance to deal with basis risk when targeting small farmers.

Automated weather stations: Depending on the quality of current and historical data, rainfall data from weather stations in the covered area can be used for index products.

Satellites: Satellite data on rainfall, vegetation, and wind speed can also be used for index products.

Combined Data Sources: Methodologies are developed to combine various data sources to extend the area of coverage and the years of data available for actuarial analysis.

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Index insurance provides tailored solutions that combine the best product structures and data sources.

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AGRI-INSURANCE TOOLKIT &

HOW TO TRANSLATE IT INTO GENERALIZED TOOLKIT FOR

OTHER REGIONS

This Programmatic Approach is Relevant to any Developing Country

Human development

Capacity building

Sustainable system

Optimal approach is to start with human development, develop enough capacity to build on it, and make the system sustainable

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An effective and viable agri-insurance system IS possible in case ALL the KEY Stakeholders are

interested and engaged into process

Insurance

companies

StateAgri-

Producers

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Stage 1AMBITION

•Evaluation of market capacity•Preparation of the agri-insurance market

development Concept

Stage 2BUILD

•Development of an agri-insurance program•Establishing a private-public partnership

(PPP) system

Stage 3MONITORI

NG•Implementation and improvement of the

system

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• In-depth interviews with agri-producers with the aim to estimate the market potential, producers’ profile and basic weather risks in agriculture

• Access to databases necessary for agri-insurance (yield-level, weather & satellite data)

• Legislation & State regulation • State programs to support agri-sector• Insurance market capacity• Reinsurance• Agri-producers’ access to financial resources • Input suppliers present in the market

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Stage 1AMBITIO

N •Evaluation of market capacity

Financial market

Agrarian sector

Producer

Weather risk profile

Databases

Government

• Draft a Concept for agri-insurance market development

• Use international leading practices were applicable• Agree to the Concept in the participatory manner with

all the key stakeholders: Agri-producers Insurance companies State

• Coordinate with the international reinsurance providers in Concept development

• Develop the relevant legislation & State regulations • Develop data bases for actuarially sound calculations

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Stage 1AMBITION •Preparation of the agri-insurance

market development Concept

• Training and education of insurance experts• Development of insurance products in cooperation with

insurance companies and agri-producers• Application of actuarially sound practices• Development of a competent

underwriting and loss adjustment system in insurance companies

• Preparation of reinsurance submissions

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Stage 2BUILD •Development of an agri-insurance

program

• Implementation of the relevant legislation & State regulations

• Establishment of the public-private partnership among:

Farmers Insurance companies State

• Establishment of the necessary associations to implement a program

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Stage 2BUILD •Establishing a PPP system

• Public awareness & marketing campaign• Education & training campaign for agri-producers• Launch of new insurance products/programs

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Stage 3MONITORI

NG•Implementation and improvement of

the system

• Joint pilot programs with Banks, MFIs, Input Suppliers, Value Chains

• Monitoring of the insurance products implemented in the market

• Improvements & further development of the system

Assessment of market opportunity & initial product concept

Stakeholder Meetings;Planning, PSA negotiation;Training on data acquisition and management

Product development:• Concept agreed with financial institutions;• Data cleaning and rating;• Design of policy• Reinsurance submission

STAR

T

1 month 2 months 9 months

Product launch (bundled with

credit)

Focus efforts to produce the agri-insurance product in 9-12 months

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Agri-Insurance Development Strategy:Identify Local Insurance Company &

Bank/MFI with Interest and CommitmentLook for insurance companies that have:… capital capacity… trainable personnel… distribution system for rural areas… demand from clients… strategy to develop agri-insurance… ready to sign PSA and collaborate

Look for Banks, MFIs, Input Suppliers, Value Chains that:

… want to increase ag portfolio… will bundle insurance with lending… want risk management instruments… ready to participate in the design of an insurance product that meets their needs

AGRI-INSURAN

CE

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Ukraine Agri-Insurance team is able to support your project

preparation & implementation

Resources Available for the Development

Five Manuals Covering Major Developmental Strengthening

Requirements:1. Introduction to Agricultural Insurance

and Risk Management2. Actuarial Basics3. Data and Information Management4. Risk Transfer5. Credit and Insurance, Marketing,

Participation, and Illicit Behavior

Other Knowledge Management Activities and experienced IFC Staff

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Gary Reusche: GReusche@ifc.org

Iryna Golovko: IGolovko@ifc.org

+38 095 273 49 37+38 044 490 64 00

IFC Ukraine Agri-Insurance

Development Project

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