Agriculture in Romania: ready, set, grow

Romania's agricultural industry is set to bloom, but the risk of drought may stunt its growth. Participants at a recent event in the capital discussed ways to protect this important sector.

The outlook is positive for agricultural production in Romania. Blessed with vast areas of fertile soil, an expected increase in subsidies and the rising interest of foreign investors, Romania's agriculture awaits some fundamental changes in the near future.

But with growth potential comes risk, which is made all the more clear due to the prominence of drought in the country. Romania's southern regions are regularly challenged by long-lasting dry conditions, one of the main topics discussed during a recent workshop given by Swiss Re in Bucharest.

Addressing the dangers of drought

During the summer of 2012, Romania experienced temps as high as a record-setting 42C, endangering not only crops, but livelihoods as well. With insurance penetration of only around 30%, there's room for improvement in protecting a sector that forms a large part of the national economy.

Drought insurance was discussed as a possible solution during the workshop. Weather index products, such as one issued by Serbian insurance company Generali Osiguranje, were offered as best practice examples. Generali Osiguranje's weather index was the first such product in the country and was designed to cover farmers against drought risk. More premiums are being written for weather index products each year, a sign of their effectiveness and success.  The big question for Romania: is the Serbian example scalable?

The importance of hail protection cover, including improving pricing and product design, were also discussed. "A company can have a winning market position based on the combination of a good product diversification,  private-public-partnerships and an effective and professional claims management approach," Reinhard Kern of Austrian Hail Insurance told the audience, using his company's product as an example.

The potential of working together

Interest from foreign investors and the prospect of state involvement - including support for irrigation systems as well as setting up mutual funds for farmers - are clear signs that the will to strengthen the Romania'a agricultural sector is there. Swiss Re can provide the way.

"SwissRe has the necessary technical input and knowledge, as well as reinsurance capacity, to develop a bundle of sound insurance products protecting the farmer's crop production," says Hans Feyen, Head Agriculture Reinsurance Centre and Europe.

We're ready to support this development by working with farmers, government officials and others in Romania. We have the know-how and data to support new products such as weather index insurance and more, such as with our mobile technology-based Agro App.

Drought index product could be a feasible and moreover an impactful solution for the numerous small-holding farmers in Romania. It's time to work together to address this untapped need.

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