Crop insurance

Its main purpose is to protect the property interests of agricultural producers – farmers who grow certain grain and oilseed crops, as well as cotton and sugar beet – against the consequences of the adverse natural conditions defined by the Law. Unfortunately, bad weather and natural disasters – such as drought, extremely high temperatures, hail, dry hot winds, hurricanes, storms, downpours, floods and mudflows – affect huge areas at once and lead to crop losses on many farms.

Under the Law, every agricultural producer is obliged to insure against all of this.

This rule belongs to the compulsory crop insurance regime established by a special law. The rules in this area have changed over time, so before concluding a contract it is worth checking the current procedure against the up-to-date version of the legislation in the “Adilet” system (adilet.zan.kz). The protection mechanism remains similar: the sown area is insured, the sum insured is tied to the costs of growing the crop, and the occurrence of an adverse event is confirmed by the authorised bodies.

The following are subject to crop insurance

  • grain crops (wheat, barley, maize, rice, millet, oats, etc.);
  • oilseeds (soybean, sunflower);
  • cotton;
  • sugar beet.

The cost of insurance depends on

  • the size of the sown area;
  • the sum insured;
  • the type of crop;
  • the natural and climatic zone.

The basis for concluding a compulsory crop insurance contract is a written application form of the established format (available from the insurer or agent), which is an integral part of the insurance contract.

Documents required to conclude an insurance contract

  • application form;
  • taxpayer registration number (RNN) (IIN or BIN is now used instead of RNN);
  • certificate confirming the existence of a bank account;
  • deed of title to the right to use the land plot.

What is an insured event?

  • hail has fallen on your fields;
  • or drought has struck your fields;
  • or they have been flooded by torrential rain;
  • or a flood has occurred;
  • or your crops have been frozen;
  • or perhaps they have been damaged by dry hot winds;
  • or you are short of irrigation water.

This means that your crops have been affected by an adverse natural phenomenon, that is, an insured event has occurred.

What to do in this situation?

  1. Call the branch of the insurance company.
  2. Come to the branch and submit a statement (within 5 business days).
  3. Obtain a certificate from Kazhydromet or the emergency agency confirming that the adverse natural phenomenon occurred. Make a copy of the document!
  4. Submit an application to the akimat for the creation of a commission to determine the sown areas affected by the adverse natural phenomenon. Make a copy of the document!

Important to know

  • If the adverse natural phenomenon is short-term (hail, downpour, frost, strong wind, mudflow), you must go to the akimat within 3 business days.
  • If your crops have been affected by a long-term adverse natural phenomenon (drought, winterkill, lack of heat, excessive soil moisture, excessive air humidity, flood, low water, dry hot wind), the application to the akimat may be submitted within 10 business days.

Insurance payment

The insurance payment is made in the amount of the policyholder’s loss, within the sum insured.

The sum insured is calculated as follows: the sown area is multiplied by the standards of direct production costs, which are determined annually by a Government resolution for each region. The Law also sets the maximum insurance rate.

How is the loss calculated?

Total loss of crops

The cost standard per hectare multiplied by the affected area.

Partial loss of crops

  • At harvest, the gross yield from the damaged areas is assessed together with the statistical authorities or by control threshing.
  • The market value of the produce harvested from one hectare is calculated on the basis of the prices of the State Food Corporation.
  • The difference between the cost standard and the market value of the produce per 1 ha of damaged area is determined.
  • The resulting difference is multiplied by the size of the damaged area.

Important to know

  • The calculations use the cost standard in force at the time the insurance contract was concluded.
  • In the event of total loss of crops, the insurance payment is made within 10 business days after all documents are received.
  • In the event of partial loss of crops, the insurance payment is made no earlier than 1 month and no later than 3 months from the end of the harvest, after the insurance company has received all documents.

What is usually not covered

Crop insurance protects against natural phenomena, not against every crop loss. As a rule, the following are not recognised as insured events:

  • losses caused by violations of agricultural technology, late sowing or untimely harvesting;
  • damage by pests and diseases, unless such risks are expressly included in the contract;
  • theft of the harvest, trampling by livestock, post-harvest storage losses;
  • lost profit: the payment is tied to the cost standard, not to expected revenue.

The exact list of exclusions is set out in the contract and the insurance rules – it is worth reading before you sign.

What to look for in the contract

  • the list of insured crops and fields, with areas stated;
  • the list of risks and their definitions (what exactly counts as drought, frost, excess moisture);
  • the cost standard per hectare from which the sum insured is calculated;
  • the deductible, if one is provided for;
  • the deadlines for notifying the insurer and submitting documents;
  • the procedure for assessing the damage and the payment deadlines.

Typical mistakes made by farmers

  • the contract is concluded late, when some of the risks have already materialised;
  • copies of certificates and statements are not kept, and later the filing dates cannot be proved;
  • inaccurate areas are stated, which leads to disputes over the calculation;
  • the harvest is gathered from damaged fields before they have been inspected by the commission and the insurer.

The general terms of agricultural insurance are collected in the agricultural insurance section, and the list of insurers is on the insurance companies page. If you need to compare terms for your farm, you can get a consultation from a broker.