Why do I still not want to buy grain insurance?

"People don't even have insurance, and you want to insure grain?" a village cadre in Henan Province told a reporter. In recent years, in order to get farming households to insure their own wheat and corn, he has had to go door to door every year to collect premiums, and this is the sentence he hears most. "The villagers have no awareness of insurance, and they are used to being frugal, saving wherever they can. Even for a premium of four or five yuan, they still have to weigh it in their minds."

"Insuring grain is originally a good policy benefiting the people of the country. According to national and Henan provincial policy provisions, this year the premium per mu is 27 yuan for wheat and 20 yuan for corn, of which the central, provincial, municipal and county governments can subsidize a total of 80%, and ordinary people only have to pay 20%, that is, four or five yuan." Liu Mingxian, member of the Party Leadership Group of the Henan Provincial Bureau of Statistics and head of the Henan Provincial Local Economic and Social Survey Team, said: "According to our survey, the participation rate for grain crops is not high." According to survey data recently released by the Henan Provincial Local Economic and Social Survey Team: among the 600 farming households surveyed, 317 households had never participated in insurance for any grain crop such as wheat, corn or rice, accounting for 52.8%.

Why does a good policy meet with a cold reception?

Farming households have weak insurance awareness and dislike low payouts and cumbersome claims procedures

"It's just a bit more than one mu, so if it's compensated, it's compensated." When the reporter conducted interviews in a certain village and brought up agricultural insurance, many villagers said this. They had either only heard of it but did not understand the specific policies and participation procedures, or had simply never heard of it. According to a survey by the Henan Provincial Local Economic and Social Survey Team: in 2013, only 21.2% of farming households participated in wheat insurance, with an insured area of 28.5%; only 11.3% of farming households participated in corn insurance, with an insured area of 16.8%.

Low payouts and cumbersome claims procedures are the reasons many villagers are unwilling to continue insuring. "According to the terms given by the insurance company, one mu of wheat can be compensated at most 447 yuan, but if there is no disaster, one mu of my wheat can sell for at least 1,000 yuan." A villager in Pingdingshan insured wheat last year, and due to drought, part of the wheat in the field was damaged. "When they wanted the premium, the village cadres came to the door to collect the fee. But when it came time to ask the insurance company to pay, the procedures were really troublesome, going back and forth several times, and in the end, after waiting more than two months, only a bit more than 200 yuan was paid per mu."

Villager Wang Min told the reporter that this year he did not buy any agricultural insurance again: "I can't afford to waste the time, I don't have that kind of free time. Rather than listen to the insurance company explain, it would be faster to go out and work for a day or two to earn money."

Liu Mingxian explained that the current agricultural insurance policy only covers the materialized costs on the land, such as seeds, chemical fertilizers and pesticides, and does not include labor costs, let alone guarantee seasonal returns, so one mu of land can be compensated at most 447 yuan. This is still under the condition of complete crop failure. If there is no complete crop failure, after factoring in the loss rate, many villagers only receive two or three hundred yuan per mu; in addition, Henan's scattered small farming households have an average planting area of only a bit more than one mu, so the returns are not high to begin with, and they are even less willing to pay insurance costs for this.

Heavy workload and low profits, insurance companies lack grassroots strength

In late August this year, when corn was at the tasseling stage, Gaocun Township in Xingyang City, Zhengzhou, was hit by hail, causing corn lodging and serious damage to yields. A large grain grower felt lucky that he had insured the 930 mu of corn land he had taken over through land transfer. At a premium of 20 yuan per mu, he spent a total of more than 18,000 yuan. However, the compensation payment he finally received was "only a bit more than 25,000 yuan, equivalent to recovering more than 7,000 yuan in losses." He asked in confusion: "According to the insured amount of 329 yuan per mu, and the disaster-affected area of 247 mu recognized by the insurance company, it should pay more than 80,000 yuan, right?"

In response, Tang Zhenlin, deputy general manager of the Henan Branch of China United Property Insurance Company Limited, explained: "According to the insurance terms, the insured amount must be multiplied by the loss rate to arrive at the payable compensation. The loss area and loss rate are both determined on site or by sampling by professionals designated by the insurance company. When a disaster occurs, samples are taken once, and after the wheat or corn in the same area matures and has a bumper harvest, samples are taken again, and the two are compared to derive the loss rate."

At the same time, corn insurance must also be multiplied by compensation ratios of 50%, 75% and 100% in turn according to the different growth stages at the time of the disaster, such as the seedling stage to before jointing, the jointing stage to the tasseling stage, and the flowering stage to the maturity stage. "At that time, the loss rate assessed for this farming household in Gaocun Township was 41.5%, and the final compensation payment was 329×247×41.5%×75%=25,293.1 yuan."

Tang Zhenlin said that many farming households cannot understand or will not listen to the insurance company's claims procedures and loss assessment process, which leaves commercial insurance companies quite helpless. At the same time, inadequate policy subsidies make commercial insurance companies even more unable to voice their difficulties. "Grain crop insurance is policy-based insurance, so profits are low to begin with, or even nonexistent. According to regulations, insurance premiums are subsidized by the central, provincial, municipal and county governments at ratios of 40%, 25%, 5% and 10%, but the county government's 10% is very difficult to put in place. Since the company began agricultural insurance in 2007, county-level governments altogether owe the company sixty or seventy million."

The insufficient grassroots strength of insurance companies is another major factor restricting the development of agricultural insurance work. Liu Mingxian told the reporter that at present commercial insurance companies have a limited number of grassroots staff, greater pressure from business development, and insufficient service capacity, making it difficult to meet the needs of various tasks such as large-scale underwriting of grain crop insurance. "Much of the work, such as filling out lists, collecting premiums and measuring land area, mainly relies on village cadres. But village cadres are burdened with heavy work and are not highly motivated. If the township government includes it in work assessment targets, village cadres then feel that difficulties are numerous, and even advance premiums for farming households in order to complete tasks. But when a disaster occurs, cases of proxy collection, mistaken collection and fraudulent collection of compensation payments also appear, and disputes arise among farming households, village cadres and insurance companies."

Insurance demand still exists, and large growers are highly motivated to participate

However, as the commercial insurance company with the largest market share in Henan's agricultural insurance, the Henan Branch of China United Property Insurance Company Limited still holds a positive and optimistic attitude toward grain crop insurance work. "Now a lot of land has been transferred out, and many large growers have appeared. The company is now targeting these large growers, carrying out targeted publicity and customized insurance contracts, because these large growers have large production investments and high risks, and their insurance awareness and enthusiasm for participation are also much higher than those of ordinary small, scattered and weak farming households." Tang Zhenlin said.

In response to problems such as low enthusiasm among farming households for participation and weak grassroots strength of insurance companies, Liu Mingxian suggested that municipal governments, townships and grassroots organizations should all actively participate in grain crop insurance work, and that it is unrealistic to let commercial insurance companies and village cadres fight alone. Publicity efforts should be increased in a targeted way, including insurance scope, claims standards, loss measurement and determination methods, determination institutions and claims procedures, so that farming households correctly understand agricultural insurance and understand the specific terms.

At the same time, the loss assessment standards for grain crop insurance should be scientific, reasonable, standardized, transparent and fair. It is suggested to integrate the technical strength of departments such as insurance, finance, agriculture, meteorology, water conservancy and statistics, and establish a grain crop risk and disaster assessment team and a rapid assessment and claims response mechanism. After a disaster accident occurs, it should be possible to promptly, scientifically and efficiently survey and determine the cause of damage, source of risk and degree of loss, make the claims procedures public, and improve the credibility of claims results and the satisfaction of farming households.