Swiss Re says drought to spur Russia crop insurance
SWISS Re is expecting that the current drought in Russia will stimulate the interest of the farmers on the young agricultural insurance market as crop failure is one of the main issues in the country.
"Nobody knows if the weather pattern that we see at the moment can repeat itself next year or just in 20 years, and I think this helps to raise awareness for financial risk management measures," SWISS Re Director Reto SCHNEIDER told Reuters.
The Swiss reinsurer estimates that 25% of Russian crops are covered by insurance. This is still a low percentage in comparisson with the 80% coverage in the U.S. market, another one of the world's biggest agricultural exporters.
At this time many farmers rely on government bailouts when crops fail. Even more, the Russian government tried to stimulate the private agricultural insurance system by providing a 50% subsidy on the premium for multiperil crop insurance (MPCI) since 2003, according to Reuters.
Meanwhile, SWISS Re's will be slightly affected by the drought because its exposure on the Russian agricultural market is very limited.
