Insurance companies continue to leave the market segment

TAS Insurance Group has lost its specialized underwriter - the lack of a license to insure agricultural risks may ultimately force it to leave this market segment. Companies such as Oranta, Providna, Universalnaya and the Ukrainian Fire Insurance Company, which previously occupied almost a quarter of the market, do not yet have permits. However, it is not only administrative restrictions that are holding back companies - farmers are gradually abandoning insurance.

The underwriter for agricultural risk insurance left the TAS Group and moved to Dominanta Insurance Company. “This was his voluntary decision. Any specialist wants to develop - this is his right,” said Pavel Tsaruk, Chairman of the Board of SG TAS. The Agricultural Risk Insurance Department of SG TAS was headed by Alexey Pidlubny. TAS does not plan to hire a new underwriter, since the lack of a license forces the company to restrain the expansion of its portfolio. “We will re-submit the documents. But once we receive a license, our activities will not change. Our agricultural insurance portfolio is about UAH 2 million. If we cannot serve clients on our own, we will outsource to a specialized specialist,” Mr. Tsaruk clarified.

Let us recall that on July 1, 2012, the law “On the Peculiarities of Insurance of Agricultural Products with State Support” came into force, which introduced a new license for insurance of agricultural risks. From this moment, insurers lost the right to carry out activities in insuring agricultural risks within the framework of the license for insuring property risks to insurers. “The regulator has clarified that such activities are illegal,” the department of underwriting, reinsurance and claims settlement of the Ukrainian Fire Insurance Company (UPSK) told Kommersant.

Only insurers who are members of the Agricultural Insurance Pool can participate in insurance with state support.

12 insurers received licenses to insure agricultural risks: AgroPolis, Aska, Brokbusiness, Dominanta, INGO Ukraine, Oranta-Sich, PZU Ukraine, Insurance Guarantees, Status, Ukrainian Agricultural Insurance Company (UASK), "Ukrainian Insurance House" and "Finist". Of these, according to IFC, in the 2012 underwriting year (before the law came into force), eight insurance companies were actively operating in the segment. They collected 73.1% of the premiums then.

Apart from SG TAS, among the major players in this segment, Oranta, Providna, Universalnaya and UPSC have not received a license. In the 2012 underwriting year, these insurance companies accounted for 22.5% of agricultural insurance premiums collected. A year earlier, they collected 31% of premiums. Due to the lack of a license, this segment was abandoned in the spring by IC Knyazha and Unika, which attracted 4.4% of premiums ( see Kommersant on April 26 ). At the same time, Oranta and Providnaya reported that they would continue to try to obtain a license. However, they are unlikely to be able to participate in winter crop insurance: applications are accepted until December 1st. Universalnaya and UPSC do not yet plan to obtain a license.

Despite the prospects of the agricultural insurance segment, it is becoming increasingly difficult for insurers to work in it. “Recently, we have begun to notice more often that large agricultural holdings are no longer interested in insurance. Their sown areas are located in several regions, so losses in one of the regions are not critical for them, they are not very noticeable in the overall results of the holding,” says the head of the corporate department insurance IC "INGO Ukraine" Sergey Krivosheev. And small farmers refuse to take out insurance in order to save money. “We have a small pool of clients, mainly companies with foreign capital that insure agricultural risks. We do not intend to intensify work in this direction. We submitted documents for obtaining a license to insure agricultural risks to the commission in order to comply with legal requirements. But, as far as I know it is known that the commission has not yet considered them,” said Andrey Peretyazhko, first vice-president of IC AXA Insurance.

At the same time, only insurers who are members of the Agrarian Insurance Pool can participate in insurance with state support: “Dominanta”, “Brokbusiness”, “Insurance Guarantees”, UASK. “Agricultural companies are told that if they want to get loans from state banks, then they need to be insured exclusively with one of the companies included in the Agricultural Insurance Pool,” explained the head of one of the companies. “We considered the possibility of joining the pool, but we do not agree with the system of joint liability in force,” noted the press service of the insurance company PZU Ukraine.

Victoria Rudenko

Agricultural insurance is narrowing