Insurance smells of jasmine in Hengxian
For rural farmer Wei Quanhui, a villager in Hengxian county, Guangxi Zhuang autonomous region, the settlement of a crop insurance claim was nothing short of magic.
Wei never thought it possible that crop losses due to bad weather would be compensated through insurance.
But late last year, when the jasmine flowers he planted wilted in inclement weather, he invoked his newly bought crop insurance policy.
"In July 2019, I insured my 60 mu (4 hectare) of jasmine flowers. In November, I received compensation of over 3,000 yuan ($448) from the insurance company due to some losses. No application process was needed. The money was refunded through a direct credit into my bank account," Wei said.
The insurance that Wei bought compensates farmers at the receiving end of extreme weather. Wei recalled he paid 130 yuan per mu toward insurance premium. The county-level government also reimbursed him 103 yuan per mu on the losses.
The jasmine flower insurance was the autonomous region's first planting industry weather index insurance. Its financial subsidies are insurance policy-based.
As Hengxian county is China's largest jasmine production and processing base, the insurance offers local farmers a financial safeguard in case the flowers they grow are damaged by bad weather.
Local government data showed annual jasmine output in Hengxian county was 80,000 metric tons, accounting for over 80 percent of the national total. The county is known as "the hometown of jasmine".
Liu Peizhi, assistant general manager of the Guangxi branch of China Pacific Insurance (Group) Co Ltd, said: "The jasmine flower industry is a pillar industry in Hengxian county, and is closely related to the local economy. The quality of jasmine flowers is mostly influenced by rainfall during the flowering period. When the rainfall is good, fresh jasmine is sold at 28 yuan per kilogram, and when the conditions are poor, the price crashes to 20 yuan per kg.
"We now provide reasonable protection to farmers so that they are willing to grow jasmine. The risks in the planting process are borne by insurance. In this way, the development of the jasmine flower industry, and that of the local economy, is ensured."
According to the company, the new insurance product covered 758 mu of jasmine flower in its first year. Insurance coverage reached 2.28 million yuan. Claim settlements reached 45,480 yuan.
Zhou Yuntao, a member of the China FinTech 50 Forum, said that as a weather index insurance, the jasmine flower cover has a relatively convenient compensation process.
It can effectively stabilize agricultural operations, and promote the modernization of local farming.
"The (jasmine) insurance helps farmers cope with meteorological risks, neutralizes losses, stabilizes farmers' income expectations, and actively helps the local government in poverty alleviation," he said.
Zhan Yong, deputy director of the financial supervision bureau of the Guangxi Zhuang autonomous region, said: "The jasmine flower insurance filled a gap in traditional insurance that only covers production risks, and marks an innovation in insurance products. It further enriches the guarantee for the local agricultural industry, and provides a reference for the future development of innovative financial products."
Hu Yingquan, an official from the China Banking and Insurance Regulatory Commission, said the region is a great example of financial opening-up and has been actively exploring and learning from international practices in index insurance, especially those in the United States.
Wang Guojun, a professor of the School of Insurance and Economics at the University of International Business and Economics in Beijing, said: "A major problem for weather index insurance is how to determine the trigger criteria for claims. That is, it is hard to determine the exact amount of rainfall for an insurance claim. At this time, support from the meteorological department is needed."
To tackle the problem, CPIC has forged connections with the local meteorological institute, so as to acquire more accurate weather data.
"In terms of payment conditions, we are gradually becoming more reasonable," Liu of CPIC said.
