Xinhua News Agency published on June 26 the full version of the
Opinions of the State Council Regarding the Reform and Development
of the Insurance Industry on its website. Issued by the State
Council on June 15, the document acknowledges the achievements of
China's insurance business since 2002, and urges further reform and
development of the industry. One of the highlights is the
incorporation of agricultural insurance into the state agricultural
support system.
Agriculture serves as the foundation of the national economy and
faces special difficulties in its production process, some other
countries have supported the development of agricultural insurance
in order to protect farmers' interest. Subsidies to agricultural
insurance are legitimate according to the World Trade
Organization's "green box policies" and they've become an important
means by which developed countries support and protect their
agricultural industries.
China now has no financial or tax preferential policies for
agricultural insurance other than levying no business taxes on
planting and breeding insurance. There are no direct subsidies to
insurance fees at all, without which China's agricultural insurance
industry is stuck in a dilemma: farmers cannot afford the
market-driven costs while an acceptable rate to farmers would put
insurers out of business. The lack of a risk transfer and sharing
mechanism for agricultural disasters is also a major difference
which sets China's agricultural insurance industry apart from those
of developed countries.
Since 2004, the China Insurance Regulatory Commission has
ratified three specialized agricultural insurance companies in
Shanghai (Anxin), Jilin Province (Anhua) and Heilongjiang Province (Yangguang). Pilot
agricultural insurance programs were also carried out in Jiangsu,
Zhejiang, Sichuan provinces and Inner Mongolia Autonomous Region.
In 2005 insurance fee income for the whole country reached 729
million yuan (US$91 million). Total compensation claims of 558
million yuan (US$69.7 million) were paid out.
The document sets out the principle for the stable advancement
of agricultural insurance programs through multiple channels. It
puts forward the explicit policy of "three subsidies": subsidy to
farmers, insurance companies and agricultural reinsurance. It also
demands acceleration in building up legislation for agricultural
insurance.
(China.org.cn by Wind Gu, June 28, 2006)