State supported insurance policies for farmers may not include a low indemnity limit

The government of Latvia has approved amendments prepared by the Ministry of Agriculture (MoA) to the regulations on granting the State and EU support to insurance of harvest, animals, and plants during the planning transitional period of 2021-2022 so as to ensure that insurance policies do not include a very low indemnity limit that does not protect farmers in the case of great losses.

Therefore, in the future:

• the minimum indemnity limit for the risk factors mentioned in the insurance policy should be in the amount of at least 200% of the insurance premium,

• in the case if the risk factors mentioned in the policy occur, the deductible may not change depending on previously disbursed insurance indemnity for any of the risk factors mentioned in the policy,

• support will not be granted for such insurance policies that provide coverage for losses caused by such diseases that are mentioned in the laws and regulations on compensation for losses occurring during the outbreak of an animal infection disease under supervision of the State or epizootic disease.

The regulations include also the following additional provisions for administration of support:

• at the moment when a farmer applies for insurance support, the policy must be valid, and the insurance policy must be fully paid by the last day of the application submission round,

• in the case of suspicion that insurance policy is not economically based and is not appropriate to the insurance purpose, the Rural Support Service may request an explanation from the insurer or the support applicant,

• regulations for insurance of animals provides proportional reduction of support in the cases when animals have been insured for a period which is less than one year,

• the insurer is obliged to inform the Rural Support Service concerning the cases when insurance contract has been amended or terminated before expiry date, and the insurance premium or its part has been repaid to the farmer.

In order for the support to be received also by applicants who have purchased insurance policies before the effective date of the regulations, all mentioned amendments shall apply only to those insurance contracts that have been signed after 20 August 2021.

Information source: Ministry of Agriculture