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Selected Papers from the International Conference on Agricultural Risk and Food Security
Edited by H. Holly Wang and Milton Boyd
Introduction
The authorization in 2004 by the China Insurance Regulatory Commission (CIRC) of the Shanghai Anxin Agricultural Insurance Co. Ltd, Sunshine Agricultural Insurance Mutual, and Jilin Anhua Agricultural Insurance Co. to provide a suite of agricultural property, life and casualty insurance as well as the first global reinsurance contract awarded to Aon Re China Ltd (by Shanghai Anxin Agricultural Insurance) in May 2005, has led to sweeping changes in the universe of risk management practices and products available to Chinese farmers. Since then the CIRC, its provincial counterparts, and the ministries of agriculture and finance have promulgated a swath of regulatory reforms, legal and institutional frameworks, and subsidies to encourage demand and expand supply. The process of reforms that started focusing on the agricultural economy in 2002 culminated in 2004 with the CPC Central Committee and the State Council actively looking for means to increase farmers' incomes and:
[...] to accelerate the establishment of policy mechanism of agricultural insurance, and to choose part of products and regions for pilot projects. Qualified places may provide certain premium subsidy for farmers who purchase planting and livestock breeding insurance ([11] CPCCC, 2004; [5] CIRC, 2010a).
The regulatory regime of the CIRC focuses on:
- strengthening communication and coordination of agricultural insurance through liaisons with the Ministry of Agriculture and its financial support of pilot projects throughout China;
- strengthening organization and guidance by providing outreach to the insurance industry in terms of crop insurance principles and program designs; and
- strengthening supervision and regulation by streamlining rules for premium determination and collection and indemnity payment, cost control, and accounting.
By many accounts insurance reforms applied to agriculture are working ([6] CIRC, 2010b). In 2007 insured acres reached 1.4 million hectares in six provincial (Jilin, Inner Mongolia, Jiangsu, Hunan, Sichuan, Xinjiang) pilot regions (of 156.2 million sown hectares nationally) and with a presence in every province and autonomous region agricultural insurance provided total notional coverage of about RMB 112.6 billion across crop, livestock, fixed assets, and life. [5] CIRC (2010a) states that in 2007 agricultural insurance premiums in China totaled RMB 5,333 million with indemnities of RMB 2,975...