Business Insurance in Polish Agriculture - Situation and Development Directions

One of the methods for managing production risk in the agriculture involves crop and animal production insurance which has been a voluntary insurance to date. In July 2008, the crop insurance became obligatory for farmers using direct payments, yet the state refunded 50% of the premium paid by a farmer. This article presents the situation of agricultural insurance in Poland in the period of 2003-2009. It also presents the proposed changes to be introduced in 2012. The paper also contains an attempt to take a stand on the solutions proposed. In 2009, subsidies from the budget for compulsory insurance in Poland amounted to approximately PLN 131 million (ca. 72.78 PLN/farm). It was found that most farmers used the compulsory insurance to prevent risk of loss in business, which includes liability insurance of a farmer and buildings within the farm, and since July 2008, the crop insurance in a specified range. It was pointed out that the obligation to insure together in one insurance policy various risks including those not occurring in the region is not conducive to active risk management by insurance. Farmers should be able to choose the risks that would be insured on their farms. The proposed changes seem to be constructed to lower budget expenses for agricultural insurance, and make a better position of insurance companies due to the distribution of risk between all farms.