Assessing Effectiveness of Insurance Premium Subsidy in Agricultural Insurance

Abstract

In many countries, the insurance as a risk management tool in agriculture is underutilized, and agricultural insurance itself with state support has many awbacks and does not perform its assigned functions, that confronts science and practice with the need to adess a number of problems existing in this field. The urgent need to improve the efficiency of agricultural insurance with s tate support in modern conditions has identified the necessity for this research. The purpose of this study is to analyze the current s tate of agricultural insurance with s tate support in the Russian Federation and the search for solutions to overcome the adverse processes in this area. In this paper, using statistical and econometric methods, we analyzed the main target indicators characterizing agricultural insurance with s tate support for the period from 2001 to 2013. Econometric analysis allowed us to determine the effect of the value of subsidies from all budgets, allocated to the payment of the insurance premium, on the sizes of facilities under in ured agricultural crops, to determine the magnitude of this effect. In modem conditions, the agricultural insurance with state support is not effective due to a mismatch of damage suffered by agricultural producers as a result of adverse climatic events and paid insurance compensation, which leads to additional costs from budget for the financial support of agricultural producers, as well as a failure of the state to honor its commitments for compensation of the part of insurance premium, despite the increase in expenditure of budgets of all levels.