Agriculture insurance - balance of interests (Part 2)
There is also a need for the state support - in fact, insurance support (in a counterbalance to direct payments from the budget to the suffered agriculture producers), which allows to use budgetary funds more rationally and to reach greater effect at smaller expenses. On the other hand, the state support of insurance is directed on overcoming of those natural restrictions, which prevent agrarian insurance development in cleanly market conditions – low profitability, complexity of tariffing, etc. Hence, state support allows reaching reduction in price of insurance for agricultural manufacturers through the mechanism of the insurance premium subsidizing, and also puts public services into operation on granting the information and methodological help to the insurance companies. Interaction of the state, insurers and insurants is based on observance of three important principles:
• Information transparency, which foresees active exchange of a trustworthy information between establishments and the organizations, representing the different interested parties;
• Stability of the same establishments existence (the Law on agricultural risks insurance in Spain has been accepted in 1978, and it has not been changed since then);
• Spirit of cooperation between agrarian insurance market participants.
Specificity of crop and definition of damage insurance contract imposes a number of difficulties at work on voluntary insurance on market conditions. Every Russian underwriter or expert on payments knows these problems. Voluntaries of insurance means also the special approach in risks’ portfolio management, and complexities with diversification (including territorial), and difficulties in establishment of limit for own deduction (both on separate regions, and on areas and on facilities).