Hungarian farmers can prepare in advance for the agricultural disaster, the system has been opened

RockedBuzz
By RockedBuzz 6 Min Read

The Hungarian State Treasury opened its online interface on April 20 (Unified application, EC), on which farmers can submit their application for this year’s agricultural insurance premium subsidy until June 9 too. (This year, the sanctioned period following the mid-May date, during which the subsidy amount was reduced by one percent per working day in the case of submitted applications, has been abolished.) In addition to notifying the insurance premium subsidy claim on the EC, producers can apply for the subsidy you must sign an insurance contract that meets the eligibility conditions and pay the insurance premium. Insurance premium subsidy can only be provided on the basis of the insurance premium actually paid.

The most popular crop insurance risk management system has been in operation since 2012, within the framework of which farmers are encouraged to take out agricultural insurance with premium subsidies that also use EU funds.

In the beginning, the total premium of the subsidized agricultural insurance remained below one and a half billion forints, last year it already exceeded 30 billion forints.

As in previous years, farmers – depending on the insured crop and damage events – now three types of construction (Type A, B and C insurance contracts) can choose from. (In the framework of the so-called package insurance of type “A”, insurance can be taken out together for each of the 8 specified types of damage for field crops and plantations grown in the largest area in our country. Type “B” insurance can be purchased for plantations and vegetable crops for 8 types of damage, while in the case of type “C” insurance, the (a producer can insure his field crops against one or more of the 8 types of damage.) Parallel to the interest, the amount of subsidies also increased: by last year, the source of payments had already risen to HUF 14.3 billion. Farmers can get back a maximum of seventy percent of the premium of their premium-subsidized agricultural crop insurance. In the case of over-claiming the limit, the maximum level of 70 percent is proportionally reduced.

The ever-increasing interest is no accident, and it is expected that it will only continue to rise this yeark. According to the statistical report of the Institute of Agricultural Economics (AKI) for last year crop insurance premiums in 2022 totaled HUF 32.9 billion, an increase of 71.4 percent compared to the previous year. (Out of this, 30.7 billion forints, i.e. more than 93 percent of the payments, the producers wanted to use the subsequent state subsidy.) But at the same time damage payments amounted to HUF 52.9 billion, which was more than four times the amount in 2021. The average loss ratio of the premium-subsidized crop insurance was 156.8 percent in 2022, primarily due to the significant drought, which negatively affected the yields of field crops and even plantations in more than half of our country. Based on the reports, the drought damage affected all the counties east of the Danube, as well as the counties of Fejér, Veszprém and the Little Land. Among field crops maize and sunflower were mostly affected, but also the yields of wheat, barley, rapeseed, soy and triticale decreased. Among the plantations, the drought affected apples, pears, plums and grapes.

As the AKI’s report states, the relevant insurers reacted to the significant increase in claims by speeding up the claim settlement processes. They increased their claims expert capacity, regrouped their experts to the affected areas and accelerated the claim settlement of reports. Video claims settlement was also carried out for those where the damage was very high (over 80 percent), and it happened that the claims settlement process was closed even without an inspection. Thanks to all these measures, insurers were able to withstand the strong onslaught, and producers who took out agricultural insurance also received payments for their losses on time.

The events of 2022 will be remembered for a long time by agricultural insurers: since the start of AKI’s data collection (2016), there has not been such a year, where claim payments exceeded premium income by more than 45 percent. In the next insurance year, an increase in premiums is expected and risk assessment may become stricter when concluding insurance policies, states the statistical report. It is expected that producers will not be able to take out premium-subsidized insurance with insurance associations in 2023, and the license of one association was revoked by the MNB at the beginning of March 2023. (By the way, agricultural insurance can be taken out at four MABISZ member companies: Generali, Allianz, Groupama and Agrárbiztosító.) – says the announcement.

Cover image: Getty Images

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