**Agricultural Insurance in China**

**Part one Evolution of Agricultural Insurance in China**

Agricultural insurance first appeared in China more than seven decades
ago. However, it has traversed a
[tortuous](http://dict.iciba.com/tortuous/) road for various reasons.
The process can be divided into three stages in general:

1.  **Initial stage.** In the 1930s and 1940s, some regions of a few
    provinces began to provide agricultural insurance, and the China
    Agricultural Insurance Company Limited was established. But that
    attempt was ephemeral due to the high risk of agricultural
    insurance, weak economy and lack of policy protection at that time.
    After the establishment of the People\'s Republic of China in 1949,
    the original People\'s Insurance Company of China learned from the
    agricultural insurance model of the former Soviet Union and
    implemented a trial business of agricultural insurance. But that try
    was suspended by the government in 1953 for the purpose of gathering
    all strength to ensure agricultural production.

2.  **Exploration stage.** The insurance business was restored and
    developed since the adoption of the
    [reform](http://dict.iciba.com/reform/) and opening-up policy. In
    1982, the People\'s Insurance Company of China (the original
    PICC)resumed its agricultural insurance business. The government did
    not provide supportive policies and the loss of business was made up
    by other lines of business within the company. In 1986, the
    Agriculture & Animal Husbandry Insurance Company under the Xinjiang
    Production and Construction Corp (currently known as China United
    Property Insurance Company) was set up, whose main business was
    agricultural insurance business. During this period, agricultural
    insurance was provided on a full commercial basis but suffered
    long-term loss. For example, between 1982 and 1993, the premium
    income of PICC totaled RMB 2967 million while its total amount of
    reimbursement reached RMB 2877 million. Suppose that 15% of the
    premium was deducted as expense, which was RMB 445 million, the
    company suffered a loss of RMB 355 million. Due to the lack of
    government policy support, the market size of agricultural insurance
    in China began to decrease year by year, after reaching a temporary
    peak of RMB 817 million in 1992, with the number of insurance
    products reducing from more than 60 to around 30.

3.  **Breakthrough stage.** Since 2002, the Chinese government further
    increased its financial support for agriculture, and took
    agricultural insurance as part of the overall deployment of building
    socialist new countryside. In 2004, the CPC Central Committee and
    the State Council wrote in the *Opinions on Some Policies of
    Increasing Farmers\' Income* (CPCCC \[2004\] No.1): "to accelerate
    the establishment of policy mechanism of agricultural insurance, and
    to choose part of products and regions for pilot projects. Qualified
    places may provide certain premium subsidy for farmers who purchase
    planting and livestock breeding insurance." With this impetus, the
    CIRC initiated Policy Agricultural Insurance Pilot Projects in
    Shanghai, Hei Longjiang, Ji Lin, Xin Jiang, Jiang Su, Si Chuan and
    Hu Nan. Hereafter, the Chinese government at all levels successively
    promulgated policies to support agricultural insurance. With steady
    progress of the pilot projects and continuous improving supervision,
    agricultural insurance gradually enters a stage of rapid and sound
    development.

**Part Two Three Characteristics of Current Agricultural Insurance in
China**

1.  **Rapid growth in market scale.** In 2007, premium income and
    reimbursement of agricultural insurance throughout China totaled RMB
    5333 million and RMB 2975 million respectively, up 529% and 403%
    over that of last year, both hitting a record high. In the same
    year, about 28.88 million fertile sows were covered by insurance,
    accounting for 60% of the country's total. Area of rice and other
    major agricultural products covered by policy agricultural insurance
    reached 140 million *mu*, about 70% of the
    [sown](http://dict.iciba.com/sown/) area in the pilot regions.

2.  **Gradual optimization of market structure.** Since 2004, China has
    approved the establishments of three professional agricultural
    insurance companies, namely Anxin Agricultural Insurance Company,
    Anhua Agricultural Insurance Company and Sunlight Mutual Insurance
    Company. Currently, a market pattern is taking shape, featuring that
    professional companies and comprehensive companies operate together
    and commercial business and policy business are carried forward in a
    coordinated manner.

3.  **More products and easier access.** According to actual needs of
    different regions, insurance companies are strengthening innovation
    of agricultural products. Besides insurance for major grain crops,
    special insurance products for trees, rapes and tobacco leaves, as
    well as agricultural products price insurance and food quality
    security insurance are also developed. Currently, there are more
    than 160 agricultural insurance products covering almost all fields
    of the planting and livestock breeding industry. Meanwhile,
    agricultural insurance has covered all provinces (regions and
    cities) in China.

**Part Three Insurance Regulation Guarantees the Development of
Agricultural Insurance from Three Aspects**

In recent years, the CIRC constantly strengthens and improves regulation
through thorough enforcement and implementation of various national
principles and requirements and plays an important role in guiding the
development of agricultural insurance.

1.  **Strengthen communication and coordination.** The CIRC has
    organized a joint investigation team with relevant departments such
    as the General Office of the State Council and the Ministry of
    Agriculture, and has carried out many specific investigations into
    the expansion of agricultural insurance pilot work. At the same
    time, the CIRC continues its efforts to try to win policy support in
    advancing agricultural insurance pilot work from the State Council
    and relevant departments to issue related documents.

2.  **Strengthen organization and guidance.** The CIRC has been
    encouraging the market access of professional agricultural insurance
    companies. It also drew up scientific pilot scheme for agricultural
    insurance in order to encourage insurance companies to design
    products suitable for the actual conditions of agriculture and rural
    areas and to satisfy farmers' needs by the greatest extent.

3.  **Strengthen supervision and regulation.** The CIRC has strengthened
    the management of agricultural insurance premium rates, and
    regulated the claim process of insurance companies in order to
    promote the level of claim service. In order to effectively prevent
    the risk of agricultural insurance and better protect the rights of
    farmers, supervision of operating cost control and independent
    accounting for agricultural insurance business have been
    implemented. At the same time, we will establish and improve
    relevant statistical system and reserve system for agricultural
    insurance and timely follow up the development of agricultural
    insurance in various regions, so as to provide data support for
    further improvement of agricultural insurance and to ensure
    sustainable development.