China to expand trials on agricultural insurance

China will further expand its trials of agricultural insurance in 2005 and encourage more companies to offer the service, said an official with the China Insurance Regulatory Commission.

Liu Jingsheng, director of the property insurance department ofthe commission, said the government is also considering providing subsidies for agricultural insurance.

Liu said the commission is also doing research on ways to set up re-insurance mechanism on agricultural insurance and to divert the high risks of the business.

China's 900 million farmers are the major victims of the catastrophes. Even if they have property insurance, farmers have to wait for the limited relief found from the government after a natural disaster.

Statistics from the meteorological department show that from 1985-1995 period, natural disasters, such as droughts and floods, annually affect 50 million hectares of crops, or 32 percent of total crops growing in the country. But few insurance companies want to enter the business because of high risk and little profit.

Statistics from the commission show that in 2003, the income from agricultural insurance in China was 460 million yuan (55 million US dollars), only accounting for 0.5 percent of the country's total premium from property insurance.

But in 2004 a batch of specialized insurance companies have setup, said Liu.

Latest news comes from the northeast China's Jilin Province. OnDec. 30, Anhua Agricultural Insurance Co. Ltd. was officially established in Changchun, capital city of Jilin Province.

Approved by the China Insurance Regulatory Commission this July,the company was funded by seven companies in Jilin, with total registered capital of 200 million yuan.

According to the plan, Anhua will be involved in a wide range of insurance businesses in rural areas, including insurance on planting and animal breeding, property insurance, short term accidental and health insurance.

To decrease costs, the company plans to reach farmers through the current rural credit cooperatives, a rural financial networks are widespread in the country's rural areas.

Source: Xinhua