To advance agricultural insurance, the pressing task is to regulate the advancing of premium payments

Currently, the key period for agricultural insurance underwriting of autumn crops is underway, but many regions commonly encounter the problem of advanced premium payments. This has become a major obstacle for operators in the process of broadly advancing agricultural insurance.

Collecting premiums from farming households is difficult, which is a common problem in the operations of insurance institutions, especially when underwriting the dispersed small-scale farming households that currently account for more than 70%, which is time-consuming, troublesome, and hard to collect. In places that attach importance to agricultural insurance, or where insurance companies have greater publicity and work efforts, the situation of advanced premium payments is more prominent. In some cases, the village committee advances the payment; in others, large farming households advance it; and in still others, some leading enterprises or agricultural means of production companies advance it. No matter who advances the payment, it is legally permitted. Because the person advancing the payment is the policyholder, as long as the insured farming household knows about and accepts it, there is no problem. But if they do not know about it and have not accepted it, there is a legal defect, because the policyholder (the person advancing the payment) has no insurable interest. In this case, it depends on how the later claims settlement is handled.

There are several scenarios: First, a third party advances the premium, but the insured farming household knows about and accepts it. After the contract takes effect, if disaster losses within the scope of the contract occur, the insurance company pays the indemnity to the affected farming household, and the farming household can return the previously advanced premium to the person who advanced it. There is no problem with this.

Second, a third party advances the premium, but the insured farming household neither knows about it nor accepts it. After disaster losses occur, the insurance company pays the indemnity to the person who advanced the premium, and that person does not return it to the insured farming household, which infringes on the interests of the insured farming household.

Third, after a third party advances the premium, no disaster losses within the scope of the contract occur, and the insurance company, in accordance with a prior agreement with the person who advanced the payment, pays the “indemnity” to the premium advancer by fabricating a false claim. This kind of non-genuine claims settlement is suspected of false claims settlement and fraudulently obtaining fiscal subsidies.

Fourth, the insurer conspires with village and township cadres to prepare a crop insurance registration roster in the name of some or all of the farming households in the village, forge the signatures of farming households, and conclude an agricultural insurance contract. The village and township cadres advance the portion of the premium that the farming households should pay, and a false insurance contract of which the farming households are unaware is concluded. After the insurance company obtains the corresponding premium subsidies from government finances at all levels, it returns the premium advanced by the village and township cadres, and both parties to the contract share the premium subsidy funds paid by the finances. This situation constitutes the criminal offenses of fraudulently obtaining fiscal subsidies and embezzling insurance premiums.

How to solve the problem of advanced premium payments commonly encountered in various places is the pressing task in advancing agricultural insurance. In the author's view:

First, according to the Insurance Law, the policyholder and the insured can be two different people. Therefore, it is legal for a third party to advance or pay agricultural insurance premiums on behalf of others, and as long as the insured farming household knows about and agrees to it, the policyholder should be deemed to have an insurable interest in the subject matter of insurance.

Second, as long as the consent of the person advancing the premium is obtained, whether the advanced payment is later returned to that person is merely a matter between the policyholder and the insured, and does not affect the validity of the agricultural insurance contract.

Third, after the premium is advanced and the insurance contract takes effect, if no disaster losses stipulated in the contract occur, neither the premium advancer nor the insured farming household (the person on whose behalf the premium was advanced) may, by any means, request a premium refund from the insurance company or obtain insurance indemnity through a false claim in order to cover the cost of the advanced payment. However, the no-claim premium privileges and reductions stipulated in the contract comply with the provisions of the Insurance Law. The problem is that because agricultural insurance has government fiscal premium subsidies, giving farming households “premium privileges or reductions” alone is worth discussing, because it is suspected of “returning premiums to farming households and fraudulently obtaining fiscal subsidies.” Therefore, the correct and error-free design of the clauses should be, under conditions where the premium is obviously relatively high and the loss ratio is relatively low, to lower the overall premium for the following year, which is more appropriate.

Fourth, under the condition that the premium is advanced, when a claim occurs, in order to compensate the premium advancer for their costs, the insurer may appropriately pay a little more indemnity for the portion of cultivated land they operate themselves, which can be regarded as an ex gratia payment (strictly speaking, such an operation is not reasonable). For crop losses on the cultivated land of the person on whose behalf the premium was advanced (the insured), the claim should also be settled according to actual losses, and the indemnity should also belong to the insured farming household. If the insured farming household voluntarily and confirms that the premium advancer receives the indemnity, it is deemed lawful.

Fifth, where there is land transfer or entrusted management of cultivated land, after the land transferee or trustee advances the premium, they may, through contractual agreement and with the consent of the holder of the land contract rights, obtain the insurance indemnity as the premium advancer. This is a normal lawful transfer of the rights and interests in insurance indemnity. However, when no disaster occurs, they may not request the insurance company to return the advanced premium.