Annex 5. Fact Sheet Czech Republic

Transcription

1 Annex 5. Fact Sheet Czech Republic 1. Generalities Agricultural insurance was until 1990 cmpulsry but since 1991 it has been vluntary n a cntract t cntract basis. The value f ttal premium fr the cmpulsry crp yield insurance and livestck insurance in 1990 was abut 5 billin CSK. In the first half f nineteen s there was a strng reductin in premium incme in agricultural insurance cnnected t the nt s gd ecnmical situatin in many agricultural enterprises. They restricted their insurance cver f plant and animal prductin. This trend ended in 1995, when the ttal premium value was less then 900 millin CZK. Since 1995 there has been stagnatin in premium vlume in agricultural insurance. The cmpetitin n the agricultural insurance market was very strng. Mre than 10 cmpanies (Otčina, Chmelařská pjišťvna, Mravskslezská kperativa, ČSOB pjišťvna, Hasičská vzájemná pjišťvna, Generali Pjišťvna, Česká pdnikatelská pjišťvna, Pjišťvna České spřitelny etc.) tried t trade in this market. Česká pjišťvna was always the market leader, with ver an 80 % share f crp and livestck insurance in the Czech Republic. The strng cmpetitin made it impssible t increase the tariffs s that financial results particularly in crp insurance in the years were unsatisfactry. This situatin led many insurance cmpanies t leave this segment f the insurance market. Since 2003 the situatin has been better mainly as a cnsequence f the increase f tariffs in crp insurance. As a cnsequence f the retreat f many cmpanies frm the agr-insurance market Česká pjišťvna increased its market share t 85 % in Table T1.1. The market share f insurance cmpanies ffering the agricultural insurance (%) Česká pjišťvna, a.s ČSOB Pjišťvna, a.s Kperativa pjišťvna, a.s Pjišťvna České spřitelny, a.s.* ) Generali pjišťvna, a.s Hasičská vzájemná pjišťvna, a.s Česká pdnikatelská pjišťvna, a.s Surce: Czech Insurance Assciatin * ) in 2000 called ČS-Živnstenská pjišťvna, a.s. 325

2 Figure F1.1. Develpment f agriculture insurance in the Czech Republic % CZK mil % 120% 100% 80% 60% 40% 20% 0% Premiums w ritten (CZK mil.) Cmpensatin payments (CZK mil.) Lss experience (%) Surces: Reprts n the state f agriculture f the Czech Republic, Česká pjišťvna a.s., Czech Insurance Assciatin The vlume f prtectin by agricultural insurance has fallen ver the lng term. The mst significant decline can be seen t have been between 1990 and It was caused by the abve-mentined fact, that agricultural insurance was cmpulsry until 1990 but after that date it has been vluntary n a cntract by cntract basis. In 1997 there was the first destructive natural disaster in the Czech Republic - a destructive fld in Mravia. But a sharp rise in lss experience in agriculture was caused by hail in the perid This event als enhanced the level and significance f agricultural insurance. In 2001 the slightly increase in written premiums was caused by the influence f the newly-created state supprt subsidy fr insurance prgrammes. Only in 1997 and 2000 were the cmpensatin payments t farmers higher than ttal agriculture insurance premiums written. 2. General Framewrk 2.1. Definitin f disaster Accrding t Act N. 586/1992 Cll., cncerning incme taxes, as amended, a natural disaster is defined as accidental fire r explsin, thunderblt, windstrm with wind speed exceeding 75 km per hur, fld, hail, land slippage, landslide and rck fall nt caused by industrial activity r building activity, avalanches r earthquake recrding at least 4 th degree n the internatinal macr-seismic scale. 326

3 2.2. General Law framewrk Act N. 240/2000 Cll., amended, is the essential rule n which crisis management is based. The bjective f this Act is t prvide demarcatin between the cmpetence f state authrities and authrities f territrial self-gvernance, and determine the rights and duties f crpratins and individuals in the preparatin f crisis situatins nt relating t the defence f the Czech Republic. Act N. 37/2004 Cll., cncerning insurance cntract, as amended, is the essential rule n which relatins in insurance are based. Further regulatins f insurance industry are: Act N. 363/1999 Cll., cncerning the insurance industry, as amended, Act N. 38/2004 Cll., cncerning insurance dealers and independent lss adjusters, as amended Objectives f the existing plicies/prgrams Agriculture enterprises apply fr specific insurance cnnected t agricultural crps r farm animals. Insurance plicies are ffered by Česká pjišťvna a.s., Generali Pjišťvna, a.s. and Hasičská vzájemná pjišťvna, a.s.. It is a private vluntary insurance accrding t the Law abut insurance cntract N. 37/2004 Cll. In the Czech Republic the law desn t frbid ad-hc measures and disaster funds cmpensating insurable damages. 3. Market cnditins Because f the market cmpetitin amng the three insurance cmpanies ffering agricultural insurance, there is cmpetitin n prices and quality f services. But there isn t any independent bdy that fixes tariffs in the Czech insurance market. As was mentined abve, there is a dminant cmpany in the Czech agricultural insurance market Česká pjišťvna, a.s. 4. General features - Insurance is vluntary. In the case f establishing a plicy the cntract defines the bligatins fr insured farmers. - The public subsidy fr insured farmers in 2005 was 30 % f premium paid fr crp insurance and 15 % f premium paid fr livestck insurance. - In crp insurance is usually used the franchise f 8 r 10 percent f insured sum n the damaged field. 327

4 - The mst usual methd fr the determinatin f lsses is using an estimatin f the lsses directly n the field by an expert frm the insurance cmpany in cperatin with insured party r accrding the veterinary dcumentatin sent t the insurance cmpany. - Delay in paying indemnity after the event r harvest: usually 3 mnths after the accident. - There is usually a bnus-malus system nly in crp insurance. In livestck insurance there is n bnus-malus system. - As regards the MPCI (multi-peril crp insurances), there is a standard ffer f crp insurance against hail, fire, strm, fld, landslide, spring frst and frst fr vines. - Price risks are nt insured. 5. Insurance prducts available There are apprximately farms cvered by insurance. The agriculture insurance cnsists f the fllwing prgrammes: Crp insurance against hail, fire; fr ther crps (except fruit) against strm, fld, landslide, winter frst damage and/r fr sme crps spring frst damage and/r fr vine frst damage. Livestck insurance mainly against cntagius diseases, ther mass diseases, injury r death caused by electrical injury r caused by an electricity utage, lss, death r abstractin f farm animals in cnsequence f a fld, pisning, verheating f animal rganism, individual lsses (injury, nn-infectius diseases). 328

5 6. Cverage in the last years The area f arable land cvered by insurance has stayed apprximately at the same level ver the last years. The share f cvered arable land in the ttal was % in Figure F6.1. The area f arable land cvered by insurance In 1000 hectares Surce: Czech Insurance Assciatin Table T6.1. The area f arable land cvered by insurance In 1000 hectares In % f ttal area f arable land 31.50% 34.76% 37.02% 35.60% 35.39% 34.36% Surce: Czech Insurance Assciatin Structure f insured plants As regards the structure f insured plants, arable crps have a share f a little less than 99 % in the whle area f insured plants in In ttal, abut 33 % f arable crps are insured in the Czech Republic. Abut 67 % f hp fields, 15 % f vineyards and abut 20 % f rchards are cvered by insurance. The percentage fr each insurance cmpany is apprximately the same as their verall market share. Figure F6.2. Premium subsidies in the Czech Republic 329

6 CZK mil Surce: Supprt and Guarantee Fund fr Farmers and Frestry (PGRLF) Ntice: This figure shws financial funds, which were actually earmarked fr the supprt f agricultural insurance. In reality earmarked funds were a little lwer. Table T6.2. The insurance penetratin rates f crps (estimates) % Surce: Czech Insurance Assciatin The abslute value figures were calculated f ttal arable land area (Statistical Yearbks f the Czech Republic, ) Table T6.3. The insurance penetratin rates f farm animals (estimates) % > 80 Surce: Czech Insurance Assciatin In the years abut 35 % f crps were cvered by insurance. The insurance penetratin rates fr farm animals are higher than in case f crps - they have varied in the range %. Regarding the structure f insured farm animals, the highest insurance penetratin rate is recrded in cattle insurance (ver 80 %). The penetratin rate in insurance f pigs and pultry is lwer. The insurance penetratin rates in the Czech Republic, especially in case f crps, are belw the average f the EU. Table T6.4. Ttal amunt f premiums written Average (00-05) Ttal (in CZK mil.)

7 f which farm animals crps trend (ttal premiums) 110.6% 104.2% 92.2% 95.0% 105.7% Surce: Czech Insurance Assciatin Figure F6.3. The share f crps and farm animals in ttal premiums written 100% 80% 60% 40% crps farm animals 20% 0% Surce: Czech Insurance Assciatin In the perid , the average value f agriculture insurance premiums accunted fr CZK millin. The premium grwth rate was 6.7 % ver the perid. The value f premiums written rse until The level declined in the next 2 years, but increased by 5.7 % in 2005 in cmparisn with Farm animal insurance premiums declined by 16 % between 2000 and 2005, while a psitive trend in the level f crp insurance premiums was recrded in the same perid (it rse by 25 % frm the 2000 value). The negative trend in insurance premiums written fr farm animals was caused by the decline in the number f farm animals by 18 % ver the perid. This decline surpassed the fall f the insurance premiums written, which crrespnds t an increase in the prprtin f livestck insured. Regarding the share f farm animal and crp premiums written in the ttal amunt f premiums written, in the perid an increasing share f crp premiums written was recrded. Crp premiums written were apprximately 64 % f the ttal in Table T6.5. Cmpensatin payments frm insurance cmpanies t farmers (indemnities) Average (00-05) Ttal (in CZK mil.) f which farm animals crps trend (ttal indemnities) 88.9% 103.2% 61.8% 73.6% 110.3% Surce: Czech Insurance Assciatin 331

8 Figure F6.4. The share f crps and farm animals in ttal indemnities 100% 80% 60% 40% crps farm animals 20% 0% Surce: Czech Insurance Assciatin The abve-mentined figure (F6.4.) shws that the share f crp cmpensatin payments was higher than the share f farm animals indemnities. Unlike the premium written, this share didn t rise cntinuusly, but varied. It s imprtant t nte that crp insurance is a mre significant part f agriculture insurance than farm animal insurance, because bth, the share f crp cmpensatin payments and the share f crp premiums written exceeded the figures fr farm animals. Table T6.6. The significance f agricultural insurance *) year share f agricultural insurance 1.25% 1.20% 1.11% 0.88% 0.78% 0.52% Surce: Czech Insurance Assciatin *) The significance was measured by the share f agricultural insurance premiums written in the ttal amunt f premiums written. The significance f agricultural insurance in the whle prtfli f insurance prducts has shwn a lng term fall. It declined frm 1.25 % in 2000 t 0.52 % in The grwth f agricultural insurance premiums was less sharp than fr ttal premiums written. Agricultural insurance is evidently nt a significant surce f incmes fr insurance cmpanies. 7. Reinsurance There is a private reinsurance system in the Czech Republic. The insurance cmpanies are reinsured by SwissRe and thers n the wrldwide reinsurance market. Reinsurance rates are nt available. 332

9 8. Alternative risk management tls The bjective f the ad-hc measures is mainly the eliminatin f the cnsequences f nn-insurable disasters. These state measures are paid t help farmers cpe with lsses frm natural disasters. Since 1995 the ad-hc measurements has been targeted at the fllwing extrardinary ccurrences: destructive fld (in 1997 and 2002), lng-lasting drught (in 2000), hard spring frst (winter 2002/2003) and a disastrus manifestatin f field mice (in 1998). These ad-hc measures were used t cmpensate damaged persns. Finance fr cmpensatin payments were distributed in the fllwing frms: Input subsidies and payment allwances: Grant supprt prgram accrding t MA Principles Stcking the fld affected areas with game (frm MA budget), Investment supprts fr measures t cpe with damage caused by flds in 1997 and 1998 (frm MA, Land Fund budgets r thrugh Natinal Meliratin Authrity), Direct aid payments: Nn-investment supprt fr measures t cpe with damage caused by flds in 1997 and 1998 (frm MA and Natinal Meliratin Authrity budgets), Cmpensatin fr the damage caused by the flds f August 2002 investment supprt (frm MA and Land Fund budgets), Cmpensatin fr damage caused by drught, field mice, hail and fld nninvestment supprt (surces: MA, Land Fund budgets and issue f bnds pursuant t Gvernment Decree N. 420/2000 Cll.), Cmpensatin fr frst damage (plughing in f winter crps) frm MA budget, Direct nn-repayable subsidy fr damage alleviatin (fld in 2002) t prcessing industry (fd prducers) frm MA budget, Supprt and Guarantee Fund fr Farmers and Frestry (in Czech PGRLF) lans (financed by The Land Fund budget) fr farming recvery in tidal lands (Fld prgram 1997/1998) lans fr a term f 10 r 20 years with 3-year extended time payment, Rental delay fr 1 3 years after fld in 1997 (Land Fund), Lwering f cntractual fine fr nn-delivery within the framewrk f the wheat time bargain in face f prducers affected with fld, drught and field mice in (State Fund f Market Regulatin in Agriculture), Extended time payment fr privatized state agricultural prperty in 1998 (Land Fund). 333

10 334

11 Table T8.1. Spending n ad-hc measures in the Czech Republic in (in CZK millin) Fld ttal Drught ttal f which subsidies (MA) GD N. 420/2000 Cll Field mice ttal Frst damage ttal Supprt ttal Surce: Reprts n the state f agriculture f the Czech Republic ( ) Table T8.2. Spending n ad-hc measures in the Czech Republic in (in CZK millin) Fld ttal Stcking with game areas ttal supprt under the MA Principles Drught ttal f which subsidies (MA) GD N. 420/2000 Cll Field mice ttal Frst damage ttal Supprt ttal Surce: Reprts n the state f agriculture f the Czech Republic ( ) The average annual spending n ad-hc measures in agriculture frm the MA budget in the perid was 1, 0436 CZK billin. During this perid, these ad-hc expenditures amunted in ttal t 10,436 CZK billin. Regarding the speed f payment, the indemnities are distributing mre quickly than cmpensatin payments frm the state budget. This is caused by the time-cnsuming prcedure f unfreezing extra-funds frm the state budget. Indemnity is thereby quick financial first aid t damaged farmers. Calamity funds 335

12 There are n calamity funds available in the Czech Republic. Mutual funds There are n mutual funds available in the Czech Republic. Nn mnetary tls There are sme frms f nn mnetary help put in t practice (fr example vluntary peple cperatin, cllectin f ld clthes and furniture, internatinal slidarity, help frm Czech army and/r firemen etc.). 9. Changes underging the system Develpment f wrking with risks In the last decade, the insurance cmpanies have been recrding adverse lss experiences as a cnsequence f the mre frequent ccurrence f destructive natural disasters. State participatin in risk cverage In recent years, there has been state participatin in ad-hc measures, but it hasn t been pssible t build up a viable system. Since 2000, The Czech gvernment has prvided insurance premium subsidies. But it simultaneusly cmpensate fr lsses withut reference t their insurability. Public private partnership feasibility Insurable risks are suppsed t be cvered by the private sectr. Since 2004, the Supprt and Guarantee Fund fr Farmers and Frestry (PGRLF) has ffered premium subsidies fr bth crp and farm animal insurance. As regards the effects f nn-insurable disasters, they are suppsed t be eliminated by state funding. Financial resurces shuld be prrated t all damaged farmers. There will be ne imprtant cnditin fr state cmpensatin payments: farmers have t be insured against risks in agriculture. 336

13 Prpsal f the new agricultural insurance system Ministry f Agriculture Farmers Insurers Cmmercial insurance cmpanies Ministry f Finance State Fund Annual Indemnities plan Farmers Ministry f Agriculture Premium Subsidy Cmmercial Reinsurance Fund fr nninsurable risks Creatin f the Fund fr nn-insurable risks 337

14 Annex 1: Technical Frm (detail f paragraph 5) One table per prduct r grup f similar prducts Prduct cvered: livestck Peril/damage cvered. Is it a insurance n yield? N. Is there a list f specific perils cvered? Yes in the insurance plicy (cntagius diseases, electricity, pisning, natural perils, verheating, injuries, and ther diseases) Technicalities: Index based? (cmputed n mete data, satellite images, etc.) Can a farmer insure nly part f the fields? Nt relevant Lss estimatin per field r per farm? Per animal Triggers: what is the minimum lss abve which the farmer is cmpensated? Nt defined Methd t calculate the reimbursement: The actual value f the similar animal f the same health animal at the same age and quality as the lst animal Cmpulsry fr the farmer? N Is there a bnus-malus system? N Time frm the harvest/damage until payment f indemnity: abut three mnth after death/destructin Gegraphic detail used by cmpanies t determine tariffs: N gegraphic differences Franchise (%). Des it cincide with the trigger? N franchise Public invlvement (subsidies t premiums, reinsurance, regulatins): 20 % f the premium paid in year fr livestck insurance in the case f death r frced destructin due t disease r ther mass lsses. Cverage in area, number f farms r value: number f farms = apprx. 4000, the sum insured = apprx. 30 billin CZK Surces 338

15 Annex 2: Technical Frm (detail f paragraph 5) One table per prduct r grup f similar prducts Prduct cvered: crp insurance Peril/damage cvered. Hail, fire, fld, strm, landslide, spring frst and frst. Is it a insurance n yield? N. Is there a list f specific perils cvered? Yes, in the plicy cntract (the insured perils can be cmbined). Technicalities: Index based? (cmputed n mete data, satellite images, etc.) Can a farmer insure nly part f the fields? Yes Lss estimatin per field r per farm? Per field Triggers: what is the minimum lss abve which the farmer is cmpensated? Usually 8 r 10 percent f the sum insured f the field. Methd t calculate the reimbursement: An estimatin f the lss n field. Cmpulsry fr the farmer? N Is there a bnus-malus system? Yes Time frm the harvest/damage until payment f indemnity: abut 3 mnth after damage Gegraphic detail used by cmpanies t determine tariffs: Yes fr hail risk r fld. Franchise (%). Des it cincide with the trigger? Yes Public invlvement (subsidies t premiums, reinsurance, regulatins): subsidies t premiums Cverage in area, number f farms r value: apprx 1 Mi hectare, 4000 farms, < 20 billin CZK 339