Armenia to allocate 500 thousand euros to support agricultural insurance in cooperation with KfW
YEREVAN, April 23. /ARKA/. Armenia plans to provide 500 thousand euros for consulting and technical support within the framework of the program to support the insurance scheme in the agricultural sector. The corresponding decision was made on Wednesday at a regular government meeting.
The program "Support for the Agricultural Insurance Scheme" in the amount of 5.3 million euros was signed between the Armenian government and the German KfW Credit Recovery Bank. 500 thousand euros are planned to be allocated from this amount.
A pilot program of state support for the introduction of an insurance system in the agricultural sector is being implemented in Armenia. Within the framework of the program, insurance premiums are subsidized in the amount of 50-60%. Subsidies for insurance premiums are financed by funds provided by KfW and the Government of the Republic of Armenia in a 50:50 ratio (pari passu).
Under the agreement, KfW has already transferred about 2.6 million euros to subsidize insurance premiums. In 2023, more than ten types of crops were insured against the risks of spring frosts, drought, hail and fire. Insurance companies sold 10,192 insurance policies for a total area of 11,662 hectares, and the total amount of insurance premiums amounted to about 1.8 billion drams.
Certain problems also arose during the implementation of the program, in particular, in 2024, due to the withdrawal of the reinsurance company from the agricultural insurance market of Armenia, insurance companies were not able to fully assume insurance risks, given the high loss ratio due to climate change.
For the 2025 agricultural year, changes were made to the program, and subsidies for insurance premiums are carried out entirely at the expense of the government, unless KfW makes a different decision (or submits a different proposal) for financing. Agricultural producers will be provided with a subsidy for the insurance premium stipulated by the insurance contract in the amount of up to 80% inclusive. In 2025, the state will support not only subsidies for agricultural producers' insurance premiums, but also insurance companies - compensating the amount of insurance payments made to agricultural producers in the part that exceeds 200% of the total amount of collected insurance premiums.
In 2025, the following crops are subject to insurance: apricot, grape, peach, plum, apple, cherry, sour cherry, watermelon, melon, potato and grain crops (wheat/barley/oats) against the risks of hail and fire, spring frosts and drought.
The German bank KfW (Kreditanstalt für Wiederaufbau) works to ensure economic and social progress in developing countries and countries with transition economies in order to improve the standard of living of society. Its shareholders are the government of Germany and the administrative-territorial units of the country. KfW has been operating in Armenia since 1998, implementing financial programs in the areas of lending to micro, small and medium-sized enterprises, energy, infrastructure and municipal management.
