Agricultural insurance has triggered a great deal of concern among insurers and the beneficiaries though its trial application now underway in 21 provinces and municipalities.
Bao Minh Insurance Joint Stock Corporation’s professional services director Nguyen Van Minh sheds some light on the pilot programme.
Agricultural insurance was formerly handled by scores of insurers but all suffered failures. Why has Bao Minh decided to invest in this sort of insurance?
Our decision is rooted in three factors.
First, Vietnam is an agricultural country, so that most land and human resources service agricultural production. Meanwhile, agricultural insurance, though underway in previous years, failed to meet farmer actual demands particularly regarding its scale and business efficiency. This market segment is then full of potential, while other insurance services allegedly came to the saturation point.
Second, agricultural production features a high risk level as it is threatened by natural calamities and epidemic outbreaks.
Third, the Vietnamese government has worked out agricultural insurance trial scheme in light of Central Resolution 26/NQ-TW and Bao Minh is part of the scheme.
Bao Minh is reportedly experimenting with coffee plant insurance in the Central Highlands province of Dak Lak. What are the programme’s initial outcomes?
Bao Minh trialed a coffee plant draught index insurance in Dak Lak from early 2011. In a short time and on a limited scale (just 56 communes in four provincial districts and Buon Ma Thuot city) the corporation signed 22 contracts with a total insured amount of over VND400 million ($20,000) and more than VND40 million worth of premiums.
After getting information about rainfall in the area from Central Highlands Region Centre for Hydro-Meteorological Forecasting, Bao Minh compensated more than VND150 million ($7,200) for its clients.
What are Bao Minh’s next steps to ensure success of this new insurance model in Dak Lak province?
Since our insurance product is new, so that in the initial trial period our prime target is to increase its popularity among farmers in the local market. Besides, the trial will help us gain necessary experiences to innovate our products and diversify insurance services to cover other risks such as floods.