Insurance is a key player in ensuring financial security for farmers, which is crucial for an agriculture-based country such as Cambodia. One of the players in the insurance market, Forte Insurance, has been providing such policies, in a pilot project for the sector, since 2015.
Forte Insurance (Cambodia) Plc managing director Youk Chamroeunrith spoke with The Post’s Cheng Sokhorng and elaborated on how agricultural insurance benefits the sector and what the challenges are behind the issue.
Why do we need agricultural insurance?
Agricultural insurance is well known in developed countries with high potential agriculture production and it runs very successfully in the US, the EU, India, Thailand and Vietnam, which ensures high production and agricultural and financial security for their farmers. Agricultural insurance is divided into two types – forestry insurance and crop insurance.
As we know, the insurance market serves to protect risks that occur when the unexpected happens and secure finances for the next steps.
So agricultural insurance is key in securing finances in the event of damage in agricultural production and to overcome risks caused by uncertain weather.
It also supports agricultural production following state policy and promotes high production as well as ensuring financial security for farmers.
What is the benefit of agricultural insurance?
While our country relies on rainwater and 60 to 70 per cent of the population are farmers, agricultural insurance will bring a lot of benefit to them. It will reimburse farmers when their crops or farms are damaged by natural disasters.
If they are less concerned about their finances, the farmers will be at peace as they are covered by insurance.
What have you done for the Kingdom’s agricultural sector?
We are an insurance company that works in agriculture. Forte Insurance has a long-term vision of providing farmers with insurance coverage.
Since 2015, Forte Insurance has pioneered a crop insurance project, which benefits 200 households, collecting an approximate $5,200 premium each season and paying out about $7,000 in claims during the same period.
We are based in Battambang, Banteay Meanchey, Pursat, Siem Reap and Kampong Thom provinces, which are focused on rice production.
We also provide forestry insurance – for crops such as rubber, cashews and corn. We used to insure 60families in the beginning, but only threefamilies currently use our services.
Our payback is based on statistical analyses of weather indices provided by antenna centres we have installed to forecast weather fluctuations, which we also show farmers to better understand our operations and build trust.
We also pay back based on the yield and revenue indices of their crops although the price of agricultural products fluctuates.
What challenges do you currently face following completion of your crop insurance pilot project?
Since we stepped into the sector, we have not gained any profits yet. More is paid out in claims then we receive in premiums. But we are also happy to pay as farmers slowly begin to understand our products.
However, we faced a lot of challenges with our pilot project. For instance, we found that awareness of insurance benefits is still limited. There is a lack of education for farmers. That and little intervention from governments and stakeholders made it difficult to build trust in the market.
The infrastructure of weather forecasting is limited, which makes it difficult for us – as an insurance player – to predict outcomes, while farmers have limited access to weather information as well.
How does one become successful in the sector?
The government is important in sustaining the agricultural insurance sector. It is difficult to operate smoothly without government subsidies.
The government will play a positive role for farmers to build trust and ensure the quality of our services. Farmers will feel safe as their finances become secure.
Though the sector also needs collaboration from stakeholders – such as microfinance institutions, banks and traders – it will be running strong if the entire sector joins together.
I believe it will happen as the government has already addressed agricultural insurance in the Agricultural Development Policy, as it will ensure financial security for farmers – yield high production and increase export volume.
This interview has been edited for length and clarity.