No absolute deductible shall be provided in the insurance clause of large livestock

On February 28, the Ministry of Finance, the Ministry of Agriculture and the CIRC jointly issued the Circular on further improving the formulation of premium-subsidized agricultural insurance products from the central government (hereinafter referred to as the "notice"). The notice requires insurance companies to cover direct physical and chemical costs or feeding costs when setting agricultural insurance clauses. There shall be no absolute exemption in the planting insurance and the insurance provisions for large livestock such as breeding sows, live pigs, cows and so on.

According to data from the China Insurance Regulatory Commission, the premium income of agricultural insurance in 2014 was 32.57 billion yuan, an increase of 6.2 percent over the same period last year, and the underwriting amount was 1.66 trillion yuan, an increase of 19.6 percent over the same period last year. 21.46 billion yuan of reparations were paid to 35 million affected farmers, an increase of 2.86 percent over the same period last year. The coverage of major crops exceeded 1.5 billion mu, accounting for 61.6% of the sown area of major crops in the country. The insured forest area is 2.47 billion mu, with a coverage rate of more than 85%. 930 million yuan of reparations were paid to 1.187 million farmers affected by the severe drought in Liaoning and 1.15 billion yuan to the people affected by Typhoon Weimasun.

The notice stipulates that the insurance liability of planting insurance includes, but is not limited to, rainstorm, flood (except flood storage by the government), waterlogging, wind, hail, freezing, drought, earthquake and other natural disasters, mudslides, landslides and other accidents, as well as diseases, insect pests, rodents, etc. The main insurance liability of aquaculture insurance includes, but is not limited to, major diseases and epidemics, natural disasters (rainstorms, floods (except government flood storage), wind disasters, lightning strikes, earthquakes, hail, freezing disasters), accidents (landslides, landslides, fires, explosions, building collapses, aerial objects falling), government culling, etc.

With regard to the issue of insurance compensation after government culling in the aquaculture industry, the "notice" clearly states that when the government carries out compulsory culling of highly infectious diseases, insurance companies should compensate insured farmers, and the amount of government special subsidies for culling may be deducted from the amount of compensation.

In terms of the insured amount, the notice requires that the insured amount should cover direct physical and chemical costs or feeding costs. In terms of compensation, the notice requires that there should be no absolute exemption in planting insurance and large livestock insurance clauses that can cover sows, pigs, cows and other large livestock by head (only). The insurance clause of planting industry should set the compensation standard of different growth period scientifically and rationally according to the distribution proportion of physicochemical cost during crop growth period. In principle, when all losses occur, the compensation standard for the three major rations crops at the seedling stage shall not be less than 40% of the insured amount. Finally, the "notice" emphasizes that the aquaculture insurance clause should take the harmless treatment of sick and dead livestock and poultry as a prerequisite for the settlement of insurance claims, and if the harmless treatment cannot be confirmed, the insurance company shall not pay compensation.

Every reporter has been informed that according to the requirements of the notice, the relevant insurance companies will comprehensively clean up the terms and conditions that have been reported, and complete the revision and re-filing by April 30, 2015. Where there are products that do not meet the above provisions, the insurance regulatory department shall not put on record; if the circumstances are serious, they shall be punished according to law, and the relevant information shall be notified to the Ministry of Finance and the Ministry of Agriculture.