The heavy losses they are faced with might make agricultural producers decide to insure a larger part of cultivated areas.
This year's prolonged drought, which has caused farmers to lose tens of millions of euros, could turn into a stream of income for insurance companies, say their representatives.
"The drought may have a positive effect in autumn. Agricultural producers will realise by then they will only be compensated for the damaged fields if they are insured," maintains Anghel Burghila, general manager with Fata Asigurari, an Italian-held company specialising in agricultural insurance. He expects the market to reach 25-30m euros next year.
According to the data provided by the Insurance Supervision Commission, in the first quarter of this year gross underwritten premiums on the segment of agricultural insurance amounted to 1.7m euros (5.4m RON), with the total number of sold policies revolving around 14,000. During the same period, gross claims settled by insurers stood at some 0.6m euros (1.8m RON).
There are no exact figures on the agricultural insurance market for last year, as insurers did not report the gross underwritten premiums from this activity separately to the Commission.
However, some market players put the value of gross underwritten premiums in 2006 at some 15m euros (50m RON).
The latest data provided by the Ministry of Agriculture show the cultivated area hit by drought is of 1.7 million hectares, with claims to be settled only for 700,000 hectares. They will be settled by the state, with the earmarked sum revolving around 160m euros (500m RON), that is between 600 and 750 RON/hectare.
The government compensates the farmers whose crops were destroyed by natural disasters such as prolonged drought, floods or strong wind (over 80 km/h), but only if have insurance policies for the land they cultivate, covering other risks than natural disasters.
Companies that received the ministry's approval this year to sell agricultural insurance are Agras, Asiban, Asirom, Astra, Generali, Omniasig, Allianz-Tiriac, Fata, BCR Asigurari, Carpatica Asig, Unita, Ardaf and Asitrans.
"I believe gross underwritten premiums from agricultural insurance will go up after this year's drought," states Catalin George Stroe, sales and marketing manager with Asirom.
"The insured area will probably double after this drought, but it will be difficult since agricultural producers do not have enough funds," states Liviu Olteanu, head of the agricultural insurance department of Astra-Uniqa.
At present, less than 10% of the 9 million-hectare arable area of Romania is insured.
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