By: Rodrigo Villalba Mosquera
Agricultural insurance was born with Law 69/1993 in Colombia as a means by which producers can encourage production and protect crops and investments against damage caused by natural and biological risks, beyond the control of the insured producer. It is a nascent market in the country in the face of growth potential, because we do not have an insurance culture, and because of the crisis in the sector itself. Until 2010 the insured area was minimal and only one insurance company offered the policy, fortunately today there are already eight, and some progress has been made, at least with 2.5% of the 7.1 million hectares cultivated, equivalent to 154,116 hectares.
Agricultural insurance is a necessary instrument in any country for agriculture, especially in Colombia whose main economic vocation is in the sector, and today, when due to climate change there are greater risks for sector investments.
The previous Wednesday, in the third debate in the Senate economic affairs committee, the Bill “by which legal and financial security is granted to agricultural insurance” was approved, of which I am your rapporteur; and without a doubt it is a very valuable legal instrument to stimulate investments in the field, protecting the crops.
The aforementioned project redefines the National Fund for Agricultural Risks (FNRA), the main source of resources for insurance, supporting an incentive of up to 85% of the value of the insurance premium, and strengthening the FNRA with new sources of income. Creates the information system for the management of agricultural risks. Defines targeting guidelines for access to subsidies, prioritizing small rural producers. It implements policies of socialization of the insurance, which is so much needed to make the insurance producer aware. It links new insurance schemes that cover what is not covered by traditional insurance: inclusive insurance, parametric and index insurance, and income insurance. The coverage is extended beyond the climate risk, establishing to protect the damages caused by natural, meteorological, geological, biological, anthropic, market and commercial risks, transportation, among others.
The importance of the Draft Law for the agricultural sector lies in that it improves the scope of the current regulation, expanding the capacity to implement public policy in the field of agricultural risk management through insurance, which generates greater legal and financial security. .
When you expand risk coverage, the same type of insurance to other modalities, and expand the sources of financing, there can be no doubt about the added value of the project to serve a greater number of hectares and producers.
Good news, around the crisis and the bad news that we receive every day.
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