In addition to the crucial role in regard to the world population, the agricultural sector is extremely sensitive field of activity with its inherent structure, featuring exclusive in economic, social, political, technological and personal risks. To this end, the effective performance in the agricultural activities in the nutrition of the human being is closely related with the management of risks threatening the agricultural production. It is therefore, the developed countries effectively implement the risk sharing and risk transfer operations under various protective policies under the general titles of; Risk Management Programs; that also accommodates; Agricultural Insurance Practices as an important part integral to such programs. In order to provide coverage for the risks threatening the agricultural industry of our country, the implementation of an insurance mechanism has been considered and for this purpose, Agricultural Insurance Code No. 5363; was enforced as of 14/06/2005.
The Code provides:
With the Insurance Pool, it will be possible,
- The establishment of Insurance Pool in regard to introducing standard provisions in insurance contracts to be executed to provide the coverage to the risks as referred under the Code, establishing the conditions for transferring risk under reasonable provisions, ensuring centralized payment of the indemnification upon occurrence of the risk, improving and spreading of the agricultural insurances
- All tasks of this Pool are carried out by AGRICULTURAL INSURANCE POOL MANAGEMENT COMPANY which, was established with equal share of the insurance companies participating in the Pool.
- Insurance companies issue insurance policies with their own name however the risk and 100% of the premium must be transferred to Agriculture Insurance Pool. These insurance companies can optionally take share from the Pool through retrocession.
- The Government provides premium subsidy exclusively to insurance contracts executed under the Code, in terms of the premium on behalf of the farmers. The amount of premium subsidy is determined by Council of Ministers on annual basis, with respect to the crops, risk, region and premises scale.
Insurance Pool Management
Agricultural Insurance Pool Board of Directors is assigned by The Code, as an administrative apparatus responsible for determining the principles and procedures of the Agricultural Insurance Pool, the loss assessment methods, executing the contract between the insurance companies wishing to take part in agricultural insurance and AGRICULTURAL INSURANCE POOL MANAGEMENT COMPANY, observing due diligence in determining the risks the subsidy to be covered, observing the practical drawbacks and problems and proposing pertinent solutions.
The Board consists of total of 7 members, two members from Ministry of Food, Agriculture and Livestock and Undersecretary of Treasury each, and one member from Association of the Insurance and Reinsurance Companies of Turkey, Union of the Agricultural Chambers of Turkey and Agricultural Insurance Pool Management Company each.
The Board's first members are assigned by Ministerial approval dated 16.1.2006 for three-year posts.
- To provide the insurance coverage for such catastrophe risks like drought, frost, etc., that cannot be covered by a single insurance company,
- To expand the capacity and coverage of reinsurance by encouraging the participation to reinsurances,
- To effectively make use of the information, human and financial resources of the insurance companies jointly,
- To effectively make use of the Government subsidies and Excess of Loss Protection,
- To prevent unfair competition in the prices,
- To encourage the participation in Insurance.