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China opens 1st insurance company for farmers
Updated: 2004-09-18 15:41

After insurance enters China for more than a century, Shanghai Anxin Agricultural Insurance Co. Ltd. (SAAIC), the first of its kind specially providing service for farmers, was established in the east China's metropolis Friday.

With a registered capital of 208 million yuan (US$25 million), the SAAIC focuses its business scope on planting and breeding industries, said Zhou Guowei, deputy manager-general of SAAIC.

More than 200,000 poultry farmers in Shanghai became the first group of beneficiaries as the Municipal Animal Husbandry Office bought insurance for their some 150 million poultry.

"I never expect this happen to me one day -- my chickens were insured and the government paid for this. I will no longer be afraid of the bird flu," said Zhou Xueming, taking over the insurance policy form from the officers with the municipal animal husbandry office.

According to the insurance contract, this 60-year-old farmer will enjoy a compensation, which accounts for 30 percent of his loss in any accidental disaster.

Statistics from the Ministry of the Civil Affairs shows natural disasters brings China an annual economic loss above 100 billion yuan (US$12 billion), with more than 200 million people affected.

Some 900 million farmers of this world's most populated country, who rely more on the nature, are usually the major victims of the catastrophes.

China has resumed agricultural insurance since 1982. Insurance companies enjoy a governmental subsidy for the insurance premium when providing insurance for planting and breeding industry.

Even though, however, few insurance companies have set foot in the business in these fields because of high risk and little profit.

Statistics from the China Insurance Regulatory Commission (CIRC) showed that in 2003, the income from agricultural insurance in China was 460 million yuan (US$55 million), only accounting for 0.5 percent of the country's total premium from property insurance.

At the same time, most of the farmers are able to afford the expense for a regular property insurance and have to wait for the limited relief found from the government after a natural disaster.

"As an active experiment to resolve all these problems, the establishment of SAAIC is a milestone in the development of China' s insurance industry," said Zhou Yanli, chairman-assistant of the CIRC.

Local government will buy a "basic insurance" for farmers. For example, in Shanghai, once a disaster happens, all the farmers engaged in rice-growing, pig or cow farming and freshwater aquiculture will be compensated with 35 percent of their loss and for those planting wheat, vegetables, trees and breeding poultry, the amends is 30 percent, said Zhou Yanli.

"Besides, if the farmers buy a supplementary property insurance themselves, they will get a full compensation for their loss," he said.

The SAAIC also provide farmers with agriculture-related property insurance, short-term personal accident insurance and health insurance.

"Through selling these insurance with higher profit, we are able to deal with the possible loss caused by the major business," said Zhou Weiguo.

Besides the SAAIC, the CIRC has also approved the establishment of another agricultural issuance company in northeastern Jilin Province, a major crop production base in China and more pilot projects have been launched in provinces and autonomous regions of Sichuan, Heilongjiang, Zhejiang, Xinjiang and Inner Mongolia, said Zhou Yanli.

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