CMA launches the agricultural insurance policy
Al-Maamari: The application of agricultural insurance is in three stages starts with vegetables followed by livestock and then palm trees and honey bees

 

HE Dr. Fuad Bin Jaafar bin Mohammed Al Sagwani, Minister of Agriculture and Fisheries signed yesterday an honorary sign on the first agricultural insurance document in the Sultanate at a ceremony organized by Capital Market Authority in cooperation with the Omani Company for Reinsurance, with the presence of a number of Excellencies and representatives of all stakeholders from the sectors of agriculture and livestock and insurance sector from different regions of the Sultanate.

The Vice President of the Insurance Sector emphasized on the importance of this type of insurance that lies in the fact that it contributes to providing a safe investment environment for agricultural and animal wealth by providing insurance coverage that protects farmers from all types of risks and maintains good levels of production.

 

This came in the opening speech delivered by Ahmed Bin Ali Al Ma'amari, Vice President of the Insurance Sector, highlighting the importance of the agricultural sector in the Sultanate and the tangible development it is witnessing as a source of national economy. As a result, there is a need for cooperation by all stakeholders to support this national sector, and to provide all possible requirements to ensure a safe environment that would increase its contribution to GDP. In line with this,  the Ministry of Agriculture and Fisheries, the Omani Chamber of Commerce and Industry, the Omani Society of Insurance Companies and the Omani Reinsurance Company organized a meeting in March 2016 to find ways of achieving the desired efficiency of this sector and promoting it and expanding its contribution to GDP by providing the insurance coverage needed by the farmer to face the risks that may be exposed to the agricultural sector and help to reduce the effects. This in turn will further develop the agricultural sector by creating a greater sense of stability and reassurance of those working in this sector and it would reduce the reliance on Government compensation in the event of any disasters - God forbid.

 

Al-Ma'amari explained the progress of the agricultural insurance project; Based on what was recommended by the participants at this meeting, a working group was formed to study the possibility of practicing the agricultural insurance activity in the Sultanate, which consists of the Capital Market Authority, the Ministry of Agriculture and Fisheries, Oman Chamber of Commerce and Industry, and Oman Re-insurance Company. The team started its work from 28 August 2016 to take the feasibility study of agricultural insurance in the Sultanate and the possibility of insurance companies to market it as an insurance product. The team also studied economically efficient covers and highlighted required tools and experiences to implement agricultural insurance, and also set recommendations related to implementation.   the team to see the experiences of some countries that have successfully developed Agricultural insurance sector. The preparation of the study required cooperation with the Ministry of Agriculture and Fisheries to identify the agricultural sector data and the risks it faces. The team also reviewed the experiences of some countries that succeeded in developing the agricultural insurance sector.

Al Mamari continued to explain the work of the team by saying: The team has commissioned Omani Reinsurance Company to adopt the agricultural insurance product in the Sultanate by providing the appropriate insurance coverage for this product in the local market, in addition to external reinsurance requirements. The company has also communicated with global reinsurance companies to provide insurance coverage and signed agreements with strategic partners to market the agricultural insurance product in the Sultanate. The team also held several meetings with some commercial banks; the Development Bank of Oman and Al-Rafid Fund on the requirement that the borrower should conclude the agricultural insurance policy before obtaining any financing for an agricultural project. On the other hand, Al-Mamari explained that the study of the draft document translated CMA's methodology in drafting laws and regulations. The draft document was presented to the farmers in order to obtain their views and listen to their observations in order to overcome any obstacles to the application of this insurance product. He pointed out that the study concluded that the agricultural insurance can be applied gradually and progressively, noting that the first phase of the application will focus on the vegetables and fruit crops of the protected agricultural houses. The second phase team will continue to study the provision of insurance cover for livestock and poultry, while the third stage will extend to cover palm trees and honey bees.

 

Al-Mamari pointed out that the next stage will ask to evaluate the experiment and provide all elements of success for the implementation of agricultural insurance and from the principle will be set up a reference committee to resolve complaints in the event of any disputes between farmers and insurance companies and be members of specialists who are capable to assess damages. In this regard, it is highly valued the initiative of Oman Chamber of Commerce and Industry in the appointment of loss assessors to be present at the branches of the Chamber of Commerce and Industry of Oman to provide a service of loses assessment. The presentation included a visual presentation that showed a definition of the steps of the team work and the methodology used in studying the project on a modern aspect about insuring protected and exposed vegetables. The presentation was presented by Ali Abdul Azim Al-Lawati, who highlighted the risks exposed to vegetable crops in the Sultanate, such as hurricanes and their exceptional climatic conditions, and the types of epidemics affecting crops. The presentation also explained the basic idea underlying the draft document for agricultural insurance

 

The team work plan was built on five basic stages, starting with the study of the possibility of providing the service in Oman and evaluating the types of documents available in the international markets for these types of products, reaching the stage of recommending applicability and then working on identifying the tools and expertise needed for this stage. And then at last, they enrolled the public in the policy review took their views on the content of the policy by meeting with farmers. The presentation included the supply of vegetables to be insured, namely eggplant, pepper, potatoes, cucumber, tomatoes, melons, watermelon, cauliflower, cabbage, onions and Se, carrots, garlic, radishes, okra. The presentation also covered the period of insurance cover, which begins after the transfer of crops from nursery to sustainable land until harvest time, in addition to clarifying the risks covered by the vegetable insurance policy such as natural fires, lightning and floods, and flooding of crops from rain, hurricanes and uncontrolled  agricultural pests. The uncovered risks were also pointed out in the presentation.

 

On the other hand, Ali Abdul Azim reviewed the options for insuring vegetables and other technical aspects related to the method of calculating the cost of insurance and the approved subscription criteria. He pointed out that the minimum insurance for any vegetable insurance policy is RO 75. The number of companies providing services in the market are four insurance companies that have submitted the insurance policy; among which are three traditional insurance companies and one Takaful insurance company.

On the other hand, the stages of preparation of the agricultural insurance policy and explained that there are five sectors are subject to insurance are: insurance of vegetables and fruits, livestock insurance, honey bee insurance, palm trees insurance, poultry insurance, provided that the process of applying agricultural insurance are in three basic stages.

 

A number of investors in the agricultural activity in the Sultanate expressed the importance of providing these types of insurance products as Hamad Al-Salami, who is interested in breeding in the livestock sector, said; we followed-up with the concerned parties the preparation stages of the draft of the agricultural insurance policy., and we expressed our opinions to ensure sound implementation of this service. It is a good approach to implement the policy in three stages which will be useful to evaluate and benefit from the experience. The insurance service will be provided for protected and exposed vegetable crops.

 

Al-Salami emphasized the role of concerned parties in enhancing the awareness of farmers about the importance of the policy and how it can protect them against any expected damages and increase crop productivity. This type of insurance is not compulsory such as vehicle insurance which is an important point that has to be brought out to farmers.

 

From his side, Rashed Al Kalbani said that the policy will encourage farmers to develop products and plant crops without hesitation. The fact that one of the clauses stipulates that insurance will cover part of the losses when they occur which will encourage new farmers to enter this field without fear.

 

It should be noted that the issuance of the agricultural insurance policy comes in support of the government's plans represented by the Ministry of Agriculture and Fisheries to strengthen the role of the agricultural sector in serving  the national economy and increase its contribution to the GDP.