Government regulating insurance to reduce farmers’risks

Although it is an agriculture-based country, Vietnam has yet to pay adequate attention to agricultural insurance. Initiated in 1982, agricultural insurance premiums account for a small percentage of total non-life insurance premiums (0.069 percent in 2004; 0.008 percent in 2005; nearly 0.012 percent in 2006, and 0.01 percent from 2007-2010).

Under Prime Ministerial Decision 315/QD-TTg dated March 1, 2011, 21 provinces and cities were selected to participate in a pilot agricultural insurance program in the fields of aquaculture, livestock and rice production. The natural risks covered were typhoon, flood, drought, frost, and saltwater intrusion, along with various diseases. The three-year program attracted the participation of 304,017 farming households and facilities, with insured value totaling nearly VND7.75 trillion, insurance premiums totaling VND394 billion, and insurance payments totaling VND712.9 billion.

According to the assessment of the Food and Agriculture Organization of the United Nations (FAO), “in spite of the many problems encountered in establishing the livestock insurance program, the results were positive.” However, “the overall result showed that the aquaculture insurance was not well managed. Without sufficient evidence and data to support claim processes, many claims were denied,” the authors of the report wrote.

According to Hoang Trong Thuy, an agricultural specialist, the insurance sector has many strict regulations which farmers find hard to understand, resulting in lengthy disputes.

“Insurance has become urgently necessary to the Vietnamese agricultural sector where the number of small to medium-sized businesses accounting for a majority, and in the context of unpredictable changes in the weather,” Thuy emphasized.

To secure agricultural production, Thuy believes the government should promulgate as soon as possible a specific decree on agricultural insurance. In his opinion, simple procedures should be applied to enable easy access for farmers, and all regulations related to agricultural insurance should be clear to prevent disputes.

Thuy also believes that agricultural insurance policies should focus on export products to boost their competitive advantages, and priority should be given to distinctive products of each specific region, as well as new plant varieties that enable farmers to create new products to access new markets.