tte Spanish agricultural insurance system is structured around an established public/private partnership. On the public side is the National Agricultural Insurance Agency (ENESA), which coordinates the system and manages resources for subsidizing insurance premiums, and the Insurance Compensation Agency (Consorcio de Compensación de Seguros) that, together with private reinsurers, provides reinsurance for the agricultural insurance market. Local governments are involved only to the extent that they are allowed to augment premium subsidies offered at the national level. On the private side, insurance contracts are sold by Agroseguro, a coinsurance pool of companies that aggregates all insurance companies active in agriculture. Farmers, insurers, and institutional representatives are all part of a general commission hosted by ENESA that functions as the managing board of the Spanish agricultural insurance system.
Similar to programs in the United States and Canada, Spain's combined program offers insurance policies covering multiple perils. Policies are available for crops, livestock, and aquaculture activities, with risks being pooled across the country by Agroseguro. Compared to the United States and Canada, however, farmers' associations are more actively involved in implementation and development of agricultural insurance, tte government has reserves to cover extreme losses, and, as a final resort, the government treasury covers losses that occur beyond these reserves. Total premiums for agriculture insurance policies purchased reached around USS550 million (€490 million) in 2003, of which approximately USS225 million (€200 million) or 41 percent of total cost, have been provided by the government (Burgaz 2004). tte rationale behind subsidizing agricultural insurance is that this outlay serves as a disincentive for the government to also provide free ad-hoc disaster assistance. To reinforce the point, Spanish producers are ineligible for disaster payments for perils for which insurance is offered. For non-covered perils, ad hoc disaster payments are available, but only if the producer had already purchased agricultural insurance for covered perils.
Was this article helpful?