Azernews.Az

By Mirsaid Ibrahimzade

Agriculture is the second major sector of Azerbaijan’s economy. Considering this fact, insurance in this filed should be at a high level.

The agricultural insurance mechanism has been developed by a working group subordinated to the Azerbaijani Ministry of Agriculture with the participation of representatives of the ministries of finance, economy, justice, Azerbaijan's Financial Market Supervisory Authority (FIMSA) and the State Committee on Property Issues, reads a message by the Agriculture Ministry.

Within the development of the mechanism, the experience of such advanced countries as the U.S., Canada, Spain, Turkey and Israel was studied. Meetings and discussions were held with specialists of these countries in the field of agriculture, and at the final stage, a model was prepared on the basis of cooperation between the public and private sectors.

For the first time, the new insurance mechanism provides for the establishment of a collective insurance system in Azerbaijan.

The draft law on agricultural insurance was prepared based on these models and after the law enters into force, agricultural insurance will work on the basis of the mechanism of cooperation between the state and the private sector, thus it will be implemented through joint insurance system, which will be managed via an e-information system.

Thanks to such a system, participants will be insured at the expense of aggregate funds, creating collective insurance capital. Unlike the terms of insurance companies, on occasion of absence of any insurance cases, these funds will not be reset, but will be transferred for the next year.

In addition, the state is going to subsidize agricultural insurance in accordance with the established interest rates. As a result, a stable and effective insurance system will be provided, which will relieve the state budget from the excessive burden in cases of natural disasters and catastrophes.

These measures will stimulate an increase of the GDP of the non-oil sector, ensure food security and attract investment to the agricultural sector.

The new mechanism provides for the establishment of a management body to be established by insurance companies under the Agricultural Insurance Fund.

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Mirsaid Ibrahimzade is AzerNews’ staff journalist, follow him on Twitter: @MirsaidIbrahim1

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