The Agriculture and Rural Development has drawn up plans to revamp agricultural insurance in the country from the central down to the local level, according to Mr Le Minh Hoan who heads the ministry.
He said that drastic action is needed after Typhoon Yagi in September 2024, the most powerful typhoon to lash Vietnam in the last 30 years, according to local media reports.
Mr Le said, "Never before have we seen the need for agricultural insurance as we did after Typhoon Yagi. After the storm, we must restructure the entire agricultural infrastructure system for sustainable adaptation."
This applies to aquaculture, crop cultivation, livestock farming, for all of which new standards and regulations must be drawn up to mitigate the impact of natural disasters and catastrophic shocks. Vietnam has experienced in the past 30 years,
Currently, agricultural insurance in Vietnam has been small in scale for many years despite financial subsidies from the state. Since 2019, the proportion of agricultural insurance premiums in the non-life insurance market has been very low, standing at 0.06-0.1%. Statistics from Bao Minh Joint Stock Corporation, a pioneer of agricultural insurance in Vietnam, show that around 90% of farmers and cooperatives currently do not have access to agricultural insurance.
In 2023, the insurance premium revenue of the agricultural insurance branch was VND42.6bn ($1.7bn), accounting for 0.06% of the total insurance premium revenue of non-life insurance companies.
Challenges
The challenges faced in expanding agricultural insurance coverage in Vietnam include:
Agricultural insurance is still a complicated branch of insurance not only for farmers but also for policy enforcement officials at the grassroots level; implementation in some localities and establishments is still confusing.
Awareness of agricultural insurance among farmers is still limited.
Without reinsurers’ support, domestic insurance companies do not have enough financial capacity to pay agricultural insurance claims. Insurers must spend a lot of time researching, developing products and negotiating with international reinsurers.
Farmers need to implement domestic and international farming and breeding techniques to convince international reinsurers to offer coverage.
Mr Nguyen Anh Tuan, vice president of the Vietnam Insurance Association, said, “Vietnam’s agricultural production is spread across the country and is heavily affected by storms, so foreign reinsurance companies often consider carefully before participating in reinsurance in Vietnam.”
Not many insurance companies currently participate in implementing agricultural insurance support policies because of risks in agriculture, especially major natural disaster risks. Mr Ngo Viet Trung, director of the Department of Insurance Management and Supervision of the Ministry of Finance, said that currently, 19 out of 32 non-life insurance companies are licensed to offer agricultural insurance services.
Mr Do Minh Hoang, a member of the board of directors of Agricultural Bank Insurance (ABIC) says that agricultural production in Vietnam has not yet taken on commodity production model. The supply chain from suppliers, processors, warehouse operators, and distributors, to exporters, etc, is still fragmented. This holds back the development of agricultural insurance. Proposals are that agricultural insurance plans should be tailored for the smallholder as well as large-scale producers.
Source: asiainsurancereview.com
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