| Agriculture serves as the fundamental basis of human subsistence. Meanwhile agriculture is also a weak sector, subjected to natural conditions and biological features. With huge risks associated with agriculture that are difficult to diversify, agri-insurance as a kind of insurance business against agricultural risks, plays an important role in diversifying risks, safeguarding farmers' income and maintaining social stability. Agri-insurance has been developed in China for a long time and encountered many twists and turns. In recent years, particularly since 2004, pilot programs of policy-oriented agri-insurance have made remarkable progress with joint efforts by China Insurance Regulatory Commission (CIRC) and other relevant departments. The coverage of agri-insurance has been expanding continuously and the government's support has been increasing. The capacity of agr-insurance in supporting economic and social development has been improved. In spite of the remarkable progress made, problems still remain in the development of agri-insurance in China, such as the absence of relevant laws and regulations, underdeveloped mechanism of catastrophe risks diversification, lack of standardization of insurance companies' operation. There is great room for improvement in enhancing the role of agri-insurance in servicing agriculture, rural areas and farmers and in strengthening the capacity of agriculture and farmers to deal with risks.In theory, the author analyzes the generality and specialty of agri-insurance as well as the supply and demand relations in the agri-insurance market. In particular, the author examines the role of government in providing agri-insurance and concludes that this type of insurance boasts special nature while fits the basic principles of common insurances. It is special since it belongs to quasi public goods, which means it is difficult to achieve a balanced supply and demand when operating solely according to market mechanism without governmental support. Such finding, therefore, justifies theoretically the proposal of establishing a policy-oriented agri-insurance system.The author goes further to review the development of agri-insurance in China, with particular attention paid to its development since the reform and opening-up program was adopted and policy-oriented agri-insurance demonstration projects launched. After analyzing the operation models of agri-insurance in several representative regions, the author highlights that despite the differences in business models in agri-insurance in various localities, the drive from the government is indispensable. Based on this finding, the author summarizes outstanding problems in the current agri-insurance, including incomplete legislative system, insufficient government support and guidance, inadequate efficient demand for agri-insurance, and the lack of risk management mechanism.In light of previous attempts in developing agri-insurance in some other countries, the author selects several typical models for in-depth analysis, such as the government-driven model represented by the United States and Canada, the mutual insurance association adopted by Japan, and the private sector-lead model supported by the government in the West Europe. Valuable inspirations and lessons are drawn upon, such as the clear definition of the nature of the agri-insurance, complete legislative system, independent managing institutions, policy support, mandatory insurance coverage, reinsurance and effective coordination among governmental departments.Accordingly, the author proposes that a nationally appropriate, low-cost, efficient agri-insurance institution shall be set up, which can ensure insurers'independent operation as well as adequate funds. Not only insurance, but rural relief should also be available at the same time. In not-so-hazardous farming areas, insurance institution shall be implemented as a national policy. In this manner, governments at all levels should make sure that the institution is supported legally, financially and administratively while avoiding unnecessary incompatibility with other policies by distributing various resources as wisely as possible among the first, second and tertiary industries. Where governments serve as a referee, market will guarantee efficiency and provide a variety of insurance products and services since market is in a better position to cater to customers'needs.By agri-insurance institution where government serves as a guiding role and market plays major role, it means the government guides the orientation and set the quantity of agri-insurances, puts in place unified policy framework, within which the qualified companies manage agri-insurance and reinsurance products, and provides possible fiscal support to those designated products. In the near term, it aims at enhancing agriculture stability by means of compensating natural disasters. In later period, it will gradually increase the insurance options. The farmers'income guarantee insurance will be carried out at appropriate time, which will gradually become a component to ensure farmers'minimum income. To be specific, the government will support the premium paid by farmers, costs of the insurance and reinsurance companies to foster certain options of agri-insurance. To ensure its implementation, the author also put forward relevant legal, organizational and risk-sharing mechanism and supporting policies.As the pilot scheme is in its initial stage, not much experience or data has been accumulated, whereas both advantages and disadvantages have already surfaced in various places. Considering differentiated productivity levels around the country and the complexity of production transformation, it is advisable that a context-based, government-guided and administratively-favored agri-insurance institution be phased in and all possible resources mobilized. The author concludes the paper by suggesting that supportive measures are indispensable, such as setting up coordinating mechanism, designing reasonable products and coverage, identifying premium subsidy, encouraging variety in operation etc. |
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