Insurance industry insiders are urging the government and development partners to set up and support a policy of subsidising insurance in the agricultural sector.
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Youk Chamroeunrith, managing director of Forte Insurance, one of the largest general insurance companies in the country, said the company introduced a pilot project in July 2015.
It was conducted in Battambang and Pursat provinces and involved 170 farming households.
“We have tested the pilot in the rice sector two years ago and we mostly insure against drought and flood,” Mr Chamroeunrith said.
“Insurance in the agriculture sector is high-risk and fragile, and agriculture production costs are unstable which makes it hard to provide insurance to farmers.”
He said government needed to set up a policy to support and subsidise the project.
“We have not yet generalised the insurance pilot plan to become bigger as we need more capital investment for the settlement of compensation, and we need more modern equipment to forecast rainfall,” Mr Chamroeunrith said.
Sam Vitou, executive director at the Cambodian Centre for Study and Development in Agriculture (CEDAC), said the centre launched the insurance scheme for agriculture to address drought and floods caused by climate change.
CEDAC also created the Cambodian Agriculture Cooperative Insurance Company in 2014 with a $96,000 investment from the Netherlands-based Achmea Foundation.
Mr Vitou said his organisation had just finished an insurance pilot test early this year in Kampong Chhnang, Kampong Speu, and Takeo provinces with more than 500 farmers.
Mr Vitou said the organisation was seeking funds from development partners to continue the project.
“We are seeking funds to expand to a thousand more farming households, especially famers who work with CEDAC on organic rice,” he said.
“There is a lot of demand from famers for insurance because, as you know, some areas have drought and floods, so if we have this system it will cut costs for farmers.
“I think for this kind of insurance, farmers are starting to understand insurance, so we have to push the government and donors to support this,” he added.
Industry observers expect this type of insurance to expand and say that it will help offset the effects of climate change, which is expected to take a heavy toll on Cambodian farmers due in part to the lack of sufficient irrigation systems.
This leaves them almost entirely dependent on increasingly erratic weather patterns, including rainfall.
Mr Chamroeunrith said that the high risk for farmers from climate change factors such as floods and drought makes them poorer and vulnerable.
He said Forte had to ask itself how it could support farmers and provide insurance to benefit them.
“I think this product is a big help for them once they are affected by climate change during the farming season,” he said.
“We are a private company but we don’t only focus on profit.
“We need also to focus on social responsibility so we need to find a way to help farmers,” Mr. Chamroeunrith said.
Hean Vanhan, director-general of agriculture at the ministry, said the government had facilitated the private sector to become more involved in agriculture insurance,
The ministry welcomed the initiative and was pushing for insurance on a bigger scale for farmers.