1. In partnership with IFC Advisory Services in Europe and Central Asia Ukraine Agri-Insurance Project Developing Agri-Insurance in Ukraine Iryna Golovko Iryna Golovko Deputy Project Manager IFC Ukraine Agri-Insurance Project

2. 2 GOVERNMENT MINISTRY OF AGRARIAN POLICY AND FOOD THE PARLIAMENT THE STATE REGULATOR PRIVATE SECTOR INSURANCE COMPANIES (15) AGRARIAN INSURANCE POOL (4) REINSURANCE COMPANIES PRODUCERS BANKS, MFIS, INPUT SUPPLIERS, VALUE CHAINS Law on State program to support agri- insurance adopted in 2012 Separate mandatory license for agri- insurance introduced State program on licensing and certification of loss adjustors launched Agrarian Insurance Pool established Law on State program to support agri- insurance adopted in 2012 Separate mandatory license for agri- insurance introduced State program on licensing and certification of loss adjustors launched Agrarian Insurance Pool established Standard insurance products for 10 crops developed and introduced in the market Wide-scale public awareness campaign reached more than 40% of Ukrainian producers Annual market analysis performed Banks use agri-insurance as quasi-collateral Standard insurance products for 10 crops developed and introduced in the market Wide-scale public awareness campaign reached more than 40% of Ukrainian producers Annual market analysis performed Banks use agri-insurance as quasi-collateral Unique Experience to Develop Agri-Insurance in Ukraine

3. first product launched 5 products launched 4 products launched subsidies increase subsidies initiated 9 month initial product development new law on agri- insurance ACTUAL SALES 2009 A2F linkage Insurance & Banks 201020112012 2013 ESTIMATED UKRAINE After project launch, a well designed program will grow. shown above IFC experience in Ukraine can be replicated (shown above) 3

4. Multi-Peril Crop Insurance (MPCI) Products developed by the IFC Project and Implemented in the Market (І) INSURANCE OF CROPS AND FUTURE YILED for THE WHOLE PRODUCTION CYCLE Winter wheat / Winter barley Winter rye / Winter triticale Winter rapeseeds (canola) (ІІ) INSURANCE OF FUTURE YILED for SPRING- SUMMER PERIOD Winter wheat / Spring wheat Winter barley / Spring barley Winter rye / Winter triticale Winter rapeseeds (canola) Corn Sunflower Sugar beets ( ІІI) INSURANCE OF CROPS for WINTER PERIOD Winter wheat / Winter barley Winter rye / Winter triticale Winter rapeseeds (canola) Make 1/3 of the Ukrainian market in 2012 Make 1/3 of the Ukrainian market in 2012 ***blue are the crops currently modified according to the requirements of the state program 4

5. Our team commits 30% of work to Global Index Insurance Facility (GIIF) Weather index: Payout is based on specific weather parameters (such as rainfall level or temperature). Area-yield index: Payout is based on average yield of an insured unit such as a county or district, not the yield of individual farmers. Hybrid insurance: Includes index and indemnity based insurance to deal with basis risk when targeting small farmers. Automated weather stations: Depending on the quality of current and historical data, rainfall data from weather stations in the covered area can be used for index products. Satellites: Satellite data on rainfall, vegetation, and wind speed can also be used for index products. Combined Data Sources: Methodologies are developed to combine various data sources to extend the area of coverage and the years of data available for actuarial analysis. 5 Index insurance provides tailored solutions that combine the best product structures and data sources.

6. 6 AGRI-INSURANCE TOOLKIT & HOW TO TRANSLATE IT INTO GENERALIZED TOOLKIT FOR OTHER REGIONS

7. This Programmatic Approach is Relevant to any Developing Country Human development Capacity building Sustainable system Optimal approach is to start with human development, develop enough capacity to build on it, and make the system sustainable 7

8. An effective and viable agri-insurance system IS possible in case ALL the KEY Stakeholders are interested and engaged into process Insurance companies State Agri- Producers 8

9. Stage 1 AMBITION Evaluation of market capacity Preparation of the agri-insurance market development Concept Stage 2 BUILD Development of an agri-insurance program Establishing a private-public partnership (PPP) system Stage 3 MONITORING Implementation and improvement of the system 9

10. In-depth interviews with agri-producers with the aim to estimate the market potential, producers’ profile and basic weather risks in agriculture Access to databases necessary for agri-insurance (yield-level, weather & satellite data) Legislation & State regulation State programs to support agri-sector Insurance market capacity Reinsurance Agri-producers’ access to financial resources Input suppliers present in the market 10 Stage 1 AMBITION Evaluation of market capacity Financial market Agrarian sector Producer Weather risk profile DatabasesGovernment Financial market Agrarian sector Producer Weather risk profile DatabasesGovernment

11. Draft a Concept for agri-insurance market development Use international leading practices were applicable Agree to the Concept in the participatory manner with all the key stakeholders:  Agri-producers  Insurance companies  State Coordinate with the international reinsurance providers in Concept development Develop the relevant legislation & State regulations Develop data bases for actuarially sound calculations 11 Stage 1 AMBITION Preparation of the agri-insurance market development Concept

12. Training and education of insurance experts Development of insurance products in cooperation with insurance companies and agri-producers Application of actuarially sound practices Development of a competent underwriting and loss adjustment system in insurance companies Preparation of reinsurance submissions 12 Stage 2 BUILD Development of an agri-insurance program

13. Implementation of the relevant legislation & State regulations Establishment of the public-private partnership among:  Farmers  Insurance companies  State Establishment of the necessary associations to implement a program 13 Stage 2 BUILD Establishing a PPP system

14. Public awareness & marketing campaign Education & training campaign for agri-producers Launch of new insurance products/programs 14 Stage 3 MONITORING Implementation and improvement of the system Joint pilot programs with Banks, MFIs, Input Suppliers, Value Chains Monitoring of the insurance products implemented in the market Improvements & further development of the system

15. Assessment of market opportunity & initial product concept Stakeholder Meetings; Planning, PSA negotiation; Training on data acquisition and management Product development: Concept agreed with financial institutions; Data cleaning and rating; Design of policy Reinsurance submission START 1 month2 months9 months Product launch (bundled with credit) Focus efforts to produce the agri-insurance product in 9-12 months 15

16. Agri-Insurance Development Strategy: Identify Local Insurance Company & Bank/MFI with Interest and Commitment Look for insurance companies that have: … capital capacity … trainable personnel … distribution system for rural areas … demand from clients … strategy to develop agri-insurance … ready to sign PSA and collaborate Look for Banks, MFIs, Input Suppliers, Value Chains that: … want to increase ag portfolio … will bundle insurance with lending … want risk management instruments … ready to participate in the design of an insurance product that meets their needs AGRI- INSURANCE 16

17. Ukraine Agri-Insurance team is able to support your project preparation & implementation Resources Available for the Development Five Manuals Covering Major Developmental Strengthening Requirements: 1.Introduction to Agricultural Insurance and Risk Management 2.Actuarial Basics 3.Data and Information Management 4.Risk Transfer 5.Credit and Insurance, Marketing, Participation, and Illicit Behavior Other Knowledge Management Activities and experienced IFC Staff 17

18. Gary Reusche: GReusche@ifc.org Iryna Golovko: IGolovko@ifc.org +38 095 273 49 37 +38 044 490 64 00 IFC Ukraine Agri-Insurance Development Project 18