Introduction of compulsory insurance of agricultural risks in Armenia economically unreasonable- deputy chairman of central bank
12.11.2014,
18:24
Itroduction of compulsory insurance of agricultural risks in Armenia is economically unreasonable, deputy chairman of the Central Bank of Armenia, Nerses Yeritsyan, said today when speaking at a conference devoted to Armenian insurance market.
YEREVAN, November 12. / ARKA /. Introduction of compulsory insurance of agricultural risks in Armenia is economically unreasonable, deputy chairman of the Central Bank of Armenia, Nerses Yeritsyan, said today when speaking at a conference devoted to Armenian insurance market.
According to him, only countries which use advanced technologies and clear risk reduction mechanisms, allowing to assess risks and making them manageable, apply compulsory insurance of agricultural risks. He said the available statistics show that Armenian farmers if insure these risks will have to pay almost as much as they could receive as compensation, which ‘is not rational in terms of cost.”
He argued then that some difficulties may arise in Armenia in connection with preventive measures to protect the harvest from natural disasters, because ‘not all are aware of the possible risks and benefits of making additional investment for the protection of their businesses.”
At the same time Nersisyan said that in many countries agricultural insurance is offered by the government, not private companies. As for Armenia, introduction of private insurance of agricultural risks should be preceded by huge work; more specifically different scenarios should be designed to make the costs manageable, otherwise it will be more beneficial to provide only government assistance to farms affected by natural disasters rather than introduce compulsory insurance.
He said the Central Bank as a regulator may help in introduction of compulsory insurance of agricultural risks, but he cited the latest available estimates, which say it will be too expensive and will not justify the costs.
Armenia applies now only one type of compulsory insurance – insurance of vehicles introduced on 1 January 2011.
According to the Central Bank, the assets of 6 Armenian insurance companies as of September 30, 2014 stood at 44.1 billion drams, having increased by 6.3% from the same period of 2013. Their liabilities stood at 27.2 billion drams, a decline of 16.8%, their capital was worth 16.9 billion drams, a growth of 17.2%. In the third quarter they earned over 2.3 billion drams in net profit. This compared with 338 million drams in losses in the same time span of 2013. ($ 1 - 415.33 drams). -0-
