Although the Myanmar government is making a concerted effort to implement a crop insurance system, private insurance firms are voicing unwillingness to participate due to the high risks involved.
The government started initiatives to institute a crop insurance policy to aid the agriculture sector to cope with the increasing threat of climate change and crop failure; however, private insurers are hesitant to follow suit because risk is high, their access to capital to underwrite such a policy is limited and rules and regulations have yet to be developed.
“Crop insurance is generally riskier than other types of insurance, so specific rules and regulations are required. This should be carried out in collaboration with Myanmar Insurance Enterprise. Private insurers like us have not been involved in this risky business yet,” said U Nyo Myint, managing director of IKBZ Insurance Co Ltd.
International organisations are lending support to the government in developing a crop insurance program, which includes reducing operational costs with the help of subsidies. The government is also collaborating with the Myanmar Rice Federation (MRF) in the preparation of the program, while Myanmar Agribusiness Public Company (MAPCO) has also submitted data regarding the crop insurance policy to the government.
“Such an insurance policy has not been implemented in Myanmar before. It is planned to be introduced in 2015 or 2016,” said U Ye Min Aung, secretary general of MRF.
Myanmar faces many challenges, including poor market research and lack of access to information, in trying to roll out a crop insurance policy.
In 2013, Myanmar’s insurance industry liberalised to allow 12 private firms to operate and offer insurance products, which was once solely controlled by the government-owned Myanmar Insurance Enterprise.
Despite the risky nature of underwriting such a policy, a senior official from Myanmar Insurance Enterprise said they are working to provide crop insurance some time next year.