Published by AGROSEGURO.

Any reproduction in part or in whole, in any form or by anymeans, without the prior written permission of AGROSEGURO,is strictly forbidden.

Textos: Antonio Fernández Toraño.

Desing and layout: Tactics Europe.

Printed by: Runiprint S.A.

Legal Deposit: M-31261-2010

1980-2009

The Spanish agriculturalinsurance system

30 YEARS OF HISTORY

Antonio Fernández TorañoPresident of AGROSEGURO, S.A.

The year 2005 marked the 25th anniversary of the creation of AGROSEGURO, the

manager (in the name and on behalf of the insurance companies of the co-insurance

pool) of a large part of all matters related to insuring weather-related risks that affect

almost all types of vegetable productions in our country and many of those risks which

affect livestock farming. Twenty-five years is always a symbolic and traditional milestone.

Thus, we celebrated it with, amongst other things, the publication of the book

“AGROSEGURO. The story of a great adventure”.

Now, in 2009, it has been thirty years since the start of that great adventure. It is another

“milestone” date during which, this time, we are commemorating the creation of an

Agricultural Insurance System. This is a System that, with the rewards and challenges

that all human work entails, has reached significant maturity and sufficient experience

which is worth recounting, placing data, figures and analyses at the disposal of those

who are interested in learning more about it. This System has proven to be notably

effective as an instrument of relief for financial damages that affect agricultural activity

as a result of its exposure in the peninsular and insular areas to three different kinds of

climates: Atlantic, Continental and Mediterranean.

And that is the purpose of this work: to show the System's evolution since 1980 through

the use of figures and information.

Because since a date that today may seem far away, but actually is not, Spanish society

has experienced events of paramount importance for the country and for our individual

and collective mentality: a Constitution was approved in 1978 (year the actual Combined

Agricultural Insurance Act was approved) that has been paving the way towards an

increasingly faster development of what is known as the “State of the Autonomous

Communities”, which entailed administrative decentralisation and a constant need for

co-ordination in order to prevent asymmetries and imbalances within the State; in 1986

we entered, together with Portugal, what was then the European Economic Community,

which for a while was known as the Europe of the Twelve, a number that has now risen

to twenty-seven. In short, significant economic development has been achieved, largely

as a result of our membership in that European Economic Area, which helped our

economy become the world's eighth largest economic power.

During this very intense period of time, the Spanish insurance industry has been able

to appropriately respond to the business challenges that have arisen through a significant

process of modernisation, restructuring and concentration. This process has been favoured

in part by the new demands that our status as a member of the EEC imposed on us.

Thus, in 2009, the Spanish insurance sector reached sixth place in Europe, with almost

60 thousand million euros in premiums, of which almost 53% (31.7 thousand million

Foreword

Antonio Fernández TorañoPresident of AGROSEGURO, S.A.

euros) came from non-life insurance. Within that section, the Agricultural Insurance

System provided a premium volume of nearly 650 million euros during that year, i.e.,

2.04%, occupying in Spain a hypothetical position around seventeen in the insurance

ranking by volume of non-life premiums.

Today, with regard to the questioning by experts in these matters (agricultural insurance

co-financed by the public administrations vs. agricultural insurance financed exclusively

by the insurance companies) of the effectiveness of systems which, like both the North

American and Spanish systems, apply (as they have for some time now) the public-private

partnership formula, it must be categorically stated that, at least the Spanish System,

with all its imperfections (which it undoubtedly has), is effective and useful for society.

If effectiveness is understood as attaining the maximum output with the lowest cost,

reaching the highest possible number of beneficiaries, it must be said that this System

meets those requirements: it handles a premium volume of close to 650 million euros,

of which approximately 44% is paid by the agricultural and livestock farmers for which

the System is designed, thus generating for the State a “savings” of financing for

agricultural activity in that amount; the indemnities paid for damages suffered due to

weather-related events regularly exceed that 56% put in by the State, but stabilise the

income of the agricultural and livestock farmers that make a living from these activities;

the pool of insurance companies is managed by AGROSEGURO, a private company in

90% of its share capital, with an average of 3.5%-4% of the premiums, thanks to the

co-insurance formula that generates large economies of scale and makes it possible for

the insurance companies to freely join the System and choose the percentage of total

risk they are willing to assume each agricultural season; it generates very important

insurance company-insured party brokering carried out by agents related or not to the

insurance companies involved, insurance and re-insurance brokers specialised in this field

of insurance activity, and agricultural organisations that have finally assumed a very

important role when guiding and advising the possible insured parties as they select their

cover, a job for which they also receive a business commission when they act as legally-

recognised insurance brokers; lastly, the System covers almost all of the country's vegetable

productions, an increasingly large part of the risks that affect the livestock productions

and aquaculture-related productions. It has also begun to offer its protection to forestry

productions.

In other words, once again, the System provides maximum output with the lowest

possible cost and the best use for all parties involved. It also relieves the public

administrations of the tasks and costs which they would actually incur if there was no

instrument as adaptable and affordable as insurance, in this case, agricultural insurance,

whose performance and evolution over the last thirty years we detail next.kkkkkkkkkkk

A project of this magnitude requires the collaboration of many. The purpose of these

lines is to express our gratitude and acknowledge all those who have dedicated even

just a few minutes towards achieving the final aim of this work: to present the evolution

of the Agricultural Insurance System over the last three decades through the use of

figures and information.

However, I would like to give particular thanks to Juan Quintana and Soledad de Juan

Arechederra for the enthusiasm and professionalism with which they took on the task

of organising and piecing together the information as it was being gathered, as well as

for the vision they have been conveying to us of the overall picture they were gradually

laying out before our eyes; to Alicia Langreo Navarro and Isabel Benito García for the

magnificent analysis of the evolution of our agricultural sector over the last thirty years,

covered in the first chapter of this work, thanks to which we can better appreciate the

role played by insurance during this same period; to Ángel Paz de las Heras who, working

from AGROSEGURO with his in-depth knowledge of the factors that have contributed

and still contribute to the day-to-day operation of the System, knew how to make the

most of the available information through comments and notes that enhance the main

chapters; to Carlos Álvarez Garrido, who together with Ángel has coordinated and

supervised the figures, data and actual structure of this work; and to all the other

professionals of the Entity who have also contributed to the preparation of various tables

and analyses. In any case, these people have been the most visible representation of all

those in this Company who have offered their knowledge and firm support to the

completion of this project that we offer to all those who want to better understand the

Spanish Agricultural Insurance System.

We sincerely thank and congratulate all of you on a job well done.

Acknowledgements

1. EVOLUTION OF THE AGRICULTURAL SECTOR INSPAIN SINCE 1980 .............................................. 9

1.1 THE BEGINNINGS .................................... 11

1.2 THE NINETEEN EIGHTIES:ENTRY INTO THE EUROPEANECONOMIC COMMUNITY. ...................... 13

1.3 THE NINETEEN NINETIES: THE START OFEXTENSIVE REFORMS IN COMMUNITYAGRICULTURAL POLICY .......................... 15

1.4 THE FIRST DECADE OF THE 21STCENTURY ................................................. 19

1.5 EPILOGUE ............................................... 22

2. THE SPANISH AGRICULTURAL INSURANCE MODEL.STRUCTURE. MILESTONES ................................. 25

2.1 BRIEF SUMMARY OF THE HISTORY OF AGRICULTURAL INSURANCE IN SPAIN ...... 26

2.2 STRUCTURE OF THE AGRICULTURALINSURANCE SYSTEM ................................ 27

2.3 MILESTONES IN THE EVOLUTION OF THESYSTEM CREATED IN 1978 ....................... 35

3. INSURED PRODUCTIONS ................................... 41

3.1 FAMILIES OF LINES AND LINES OF INSURANCE. EVOLUTION AND TIMELINE .. 43

3.2 INSURED AGRICULTURAL AREA ANDPRODUCTION ........................................... 44

3.3 INSURED ANIMALS ................................... 53

3.4 INSURANCE FOR THE COLLECTION AND DISPOSAL OF DEAD FARM ANIMALS (C&D) ....................................... 57

4. SUBSIDIES FOR INSURANCE PRICES ................... 59

4.1 ENESA - SPANISH AGRICULTURAL INSURANCE ENTITY ................................. 60

4.2 AUTONOMOUS COMMUNITIES ............... 62

4.3 THE TOTAL SUBSIDY FOR INSURANCECOST COMPARED WITH PREMIUMS ........ 64

Contents

5. PURCHASING AND DISTRIBUTION ..................... 69

5.1 PURCHASING AGRICULTURAL INSURANCE ............................................. 70

5.2 PURCHASING OF INSURANCE BY TYPEOF HOLDER .............................................. 80

5.3 DISTRIBUTION OF AGRICULTURALINSURANCE ............................................. 84

6. ASSESSMENT OF DAMAGES AND LOSS ............ 87

6.1 EVOLUTION OF THE EXPERT NETWORK .... 89

6.2 APPRAISAL ............................................... 91

6.3 CLAIMS..................................................... 93

6.4 THE BIGGEST LOSSES IN THE SYSTEM'S ...... HISTORY .................................................. 99

6.4.1 Hail ................................................. 99

6.4.2 Frost ............................................. 102

6.4.3 Drought ........................................ 106

6.4.4 Wind ............................................ 108

7. R&D&I IN AGRICULTURAL INSURANCE ............ 111

7.1 IDENTIFICATION OF INSURED RISK. DETERMINING DAMAGE ........................ 112

7.2 ISOLATION AND CHARACTERISATION OF SYNTHESIZED PROTEINS IN RESPONSE TO FROST IN FRUIT TREE SPECIES ................ 114

7.3 FRUIT TREE PRODUCTION POTENTIAL METHOD ................................................. 115

7.4 SATELLITE MEASUREMENT OF THE VEGETATION INDEX ............................... 117

8. PROTECTION FOR INSURED PARTIES ................ 121

8.1 CUSTOMER SERVICE .............................. 124

8.2 CUSTOMER OMBUDSMAN .................... 125

8.3 SATISFACTION SURVEYS ........................ 126

9. EPILOGUE ....................................................... 130

10. TABLES AND GRAPHS ................................... 131

1 Evolution of the agriculturalsector in Spain since 1980

10

In the period since 1980, Spanish agriculture has undergone

radical changes: nowadays it is more appropriate to talk

about a food system in which agriculture is the first phase

and whose products are passed on to the consumer, via

industry and trade, as food.

The greatest changes that have taken place during this era

can be grouped into two large blocks:

• External changes caused, on the one hand, by political

and institutional changes experienced in Spain, and on

the other, by social and economic changes.kkkkkkkk

• Changes in the sector itself and in agricultural policy.

The finalisation of the Spanish political transition is a

noteworthy element of the first of these blocks, as are the

consolidation of democracy, the emergence from the crisis

of the 1970s and the joining of the then European Economic

Community (EEC); the formation and implementation of the

State of Autonomous Communities; transformations within

the European Community, which is now the European Union;

the economic growth from the 1990s up until the current

crisis; greater participation of women in economic activity;

changes in consumer habits; the huge numbers of

immigrants and changes in population, which have

aggravated desertification; and the ageing of the inland area

of the Iberian Peninsula.

The opening up and increase of foreign trade within the

European and global framework are part of the second block,

along with changes in the food system, in which retail

distribution is taking over; rising verticalisation; globalisation

of leading companies; changes in the way we perceive food;

the role of advertising; changes in consumer habits;

technological developments, etc. One fundamental issue is

agriculture's loss of weight and influential ability in society

and within the food system itself. On the other hand, the

sudden burst of emerging countries on to the global food

scene is also an issue, both in terms of producer quality as

well as consumers and the major changes in their diet.

Furthermore, agricultural policy has gone from being national

and centrally managed to being integrated into the Common

Agricultural Policy (CAP) of the European Union and

managed, and to a large extent decided, by the autonomous

communities. We have gone from an interventionist policy,

aimed at protecting European agriculture, to the development

of strategies for limiting productions and with that,

expenditure in the sector; from supporting productions to

directly supporting income; from a preference for the

Community to an increased opening-up to global trade; from

support for productions as a basic philosophy to concern for

the environment, rural development and animal welfare.

During the last decade, food safety policies have finally come

into play. They have become a key factor of public action

within the sector and of territorial cohesion activities, which

directly affect the rural world. Lastly, we are witnessing the

growing connection of agriculture with the production of

biofuels and the rural environment, with the growth of solar

and wind farms, and with the energy sector, upon which

agriculture is increasingly dependent due to oil products.

As a conclusion to this discussion, it is necessary to mention

the effects of the economic and financial crisis (which began

in 2007 with the raw materials crisis) on the world food

system. The concern that the people of developed and

emerging countries have regarding the availability of sufficient

food is quite possibly reversing certain political stances on

11

When the current Agricultural Insurance System was

founded in 1980, the Spanish agricultural sector was

undergoing profound changes caused by the transition to

democracy. These were in addition to the serious

modifications the sector had been experiencing since the

1960s, which consisted of a process aimed at modernising

and creating a structure more similar to that of our

neighbouring countries. From the post-war years of rationing

to 1980, shortly after the Constitution was approved and

the first democratic elections were held, the agricultural

sector experienced profound changes: the decrease of the

agricultural working population and the large waves of

migration that depopulated a large part of the inland area

of the Iberian Peninsula, agricultural mechanisation, the

increase in consumption of both inputs and outputs, the

development of intensive livestock farming, the boom in

export-led sectors such as the orange sector, the increase in

domestic consumption, the growth of foreign trade, the

implementation of agricultural social security, etc. As regards

agricultural policy, around the year 1960 the Agricultural

Expansion Service (Servicio de Extensión Agraria) was

established, which played a significant role in the training

and modernisation of farmers. Throughout the 1960s and

1970s, legal structures were changed, irrigation was increased

and, between the end of the 1960s and the beginning of

the 1970s, a legislative package brought the management

of markets closer to the models of European Community

countries, emphasising the creation of the FORPPA (Fund for

the Management and Regulation of Agricultural Products

and Prices), the new role of the National Agricultural Products

Service (SENPA) and the new way of regulating markets.

These changes lay within the framework of the in-depth

modification of the economic policy and development plans,

which also provided significant support to the food industry

and helped develop cooperatives for supplies, wines and oils,

amongst others.

1.1 The Beginnings

agriculture and on the food system in general, as has already

been seen from the relevance that the Food and Agriculture

Organization (FAO) summits are regaining. In light of these

circumstances, the debate on the need for a new green

revolution capable of increasing global food production has

been brought back to the table, which could collide with the

environmentalist view that predominates in the wealthiest

countries.

The arrival of democracy (1976-77) and the economic pacts

to help face the crisis that spanned the country were the

Framework for the development of the agricultural sector

during the first years of the transition. At that time, the

market policy had become the main focus of talks between

the government and the new representative structure for

farmers and industries that had replaced the vertical Trade

Union and which was gradually replacing the agricultural

chambers (Cámaras Agrarias) in the various government

bodies.

In 1980, when the Agricultural Insurance System began its

activity, the agricultural sector had joined forces with all of

society in a combined effort to tackle the economic crisis

and lower inflation that was above 20% and which was

threatening to block the economy and with it the new State,

as was expressed in the Moncloa Pacts. That was the year

that the Ministry for Agriculture became the Ministry for

Agriculture, Fisheries and Food, a decision which highlighted

the intention to consider the food system as a whole, into

which industry and trade networks were integrated as

essential activities. In practice, this integrated view of the

whole system is only now starting to become a reality.

It was also around that year that certain laws of utmost

importance for the sector were passed: the Agricultural

Insurance Act (Ley de Seguros Agrarios - 1978), which was

the first law passed in democratic Spain and had the backing

of the entire Parliament; the Visibly Improvable Farms Act

(Ley de Fincas Manifiestamente Mejorables - 1979); and the

Rural Lease Act (Ley de Arrendamientos Rústicos - 1980),

whose effectiveness, just like many other structural policies,

was limited, as was analysed much later in the White Paper

on Agriculture and Rural Development (Libro Blanco de la

Agricultura y el Desarrollo Rural - 2003).

In 1980, Spain was still a very agricultural country, with 17%

of the working population engaged in agricultural activities,

despite the fact that the agricultural sector only accounted

for 6% of final production. It was also at that time that

certain agricultural sectors found themselves involved in the

great chapters of Spanish exportation, as was the case with

citrus fruits, winter fruits and vegetables and oil. The food

industry was already an important part of Spanish industry.

In 1982, the Agriculture Census highlighted the existence of

2,375,327 agricultural farms, a mere 0.8% less than in 1972.

The vast majority of these farms were extremely small: 26%

were smaller than one hectare, 62% were smaller than five

hectares and only 4.9% were bigger than fifty hectares.

Given these circumstances, it was certain that most of the

farms were of the size that placed them below the profitability

threshold.

In 1980, farmland had reached 20.5 million hectares and

remained more or less stable throughout the following

decade. Irrigated land accounted for 13.8% of all farmland,

a percentage that rose by 1% in the following decade. As

for the shares of the various crops, arable crops accounted

for 52% with fallow and unoccupied lands and woodlands

accounting for 24% each. The high level of development

reached by intensive livestock farming and the horticultural

sector is of special note.

In the year AGROSEGURO was created, final agricultural

production was 1,855,667 million pesetas, 56% of which

corresponded to the agricultural subsector and 36.3% to

livestock, while the remainder was accounted for by forestry.

The contributions of meat produce (25.3%), fruit and

vegetables (22.4%), cereals (12.3%), dairy products (8.9%),

wine (5.8%) and oil (3.6%) are also worth noting.

In that same year, total agricultural exports reached 300,000

million pesetas, compared with 350,000 for total imports,

with a clearly negative balance.

12

13

During the first half of the decade, the transition to

democracy had been finalised and, following the Moncloa

Pacts, the economic indicators had begun to improve. During

this time, Spanish agricultural policy decided to dissolve what

was left of autarkic politics (absorption of the General

Commissariat for Supply and Transport (CAT) by SENPA

(National Agricultural Products Service), elimination of the

mandatory handing over of wheat, elimination of the

National Tobacco Service, elimination of forms of state trade

for agricultural and food products, etc.) and prepare the

sector for entry into the then European Economic Community

(EEC).

Certain acts of particular note were passed during the first

half of the decade: the Family Farms and Young Farmers

Statute (Estatuto de la Explotación Familiar Agraria y de los

Jóvenes Agricultores - 1981), Purchasing of Agricultural

Products Act (Ley de Contratación de Productos Agrarios -

1982), Mountain Agriculture Act (Ley de Agricultura de

Montaña - 1982) and the Production and Trade of Wheat and

its by-products Act (Ley de Producción y Comercio de Trigo

y sus Derivados - 1984). This last Act was directly aimed at

eliminating the mechanisms that still remained of the autarky.

The first Act had structural purposes, although it had few

actual repercussions, while the Purchasing of Agricultural

Products Act and the Mountain Agriculture Act were hardly

effective until they were linked to similar European regulations

following the entry into the EEC. The legislative activity during

the second half of the decade focused on the adaptation of

Community legislation to Spain.

During this time, the existence of a series of sectorial plans

aimed at making the production sectors more competitive is

particularly noteworthy: cotton, olives, milk, etc. The objective

of all these plans was to achieve a high number of viable

farms and entailed a medium-term strategy to increase

production.

With regard to governmental affairs, the “State of the

Autonomous Communities" was established during this

decade with the approval of most of the Statutes of the

Autonomous Communities (Estatutos Autonómicos). This

was a process which had extensive repercussions on agricultural

policy, since the latter was transferred almost in its entirety,

with market intervention, agricultural insurance policy and

the general planning and coordination of the activity falling

under the control of the central government.2222222222

Also throughout this period, the overall structure of the

agricultural organisations was further clarified. Thus, by the

end of the decade, and after several processes of merging

national organisations and changes in affiliation on the part

of certain regional organisations, the three Professional

Agricultural Organisations that have been representing the

sector since then were established: the Coordinator of Farmer

and Livestock Breeder Organisations (COAG), the Small Farmers

Union (UPA) and the Agricultural Association of Young Farmers

(ASAJA). The loss of the functions and content of the

1.2 The nineteen eighties:Entry into the European Economic Community

14

agricultural chambers (Cámaras Agrarias) contributed to the

establishment of these organisations, although problems still

continue to arise. During the second half of the 1980s, the

Confederation of Spanish Agricultural Cooperatives (CCAE)

was formed which, for all intents and purposes, replaced the

Spanish Union of Agricultural Cooperatives (UNACO) in the

dealings with the Administrations and has had a positive

impact on the modernisation of Spanish cooperatives.

Spain's entry into the EEC in January 1986 made extensive

modification necessary, especially with regard to the policy

of prices and markets and to the aid provided for the marketing

and industrialisation of agricultural products. This entry also

required the adaptation of the structural policy, although it

continued to have a very high national participation in issues

that were crucial for Spain, such as irrigation.222222222222

Before Spain joined the EEC, structural surpluses of milk,

meats, cereals, sugar, etc. had been registered in the

Community, which required a continuous increase in

Community budgets and created permanent conflicts in

international relations. As a result, the Commission

implemented a series of measures that restricted production

through quotas, allotments, intervention limitations, exportation

subsidies, etc. Meanwhile, policies had been developed in

Spain that sought to improve the farms' profitability and

necessarily led to increased production. As a result, various

Spanish sub-sectors were required to put the brakes on

expansive policies that still had more results to provide.

In the Treaty of Accession, very long transition periods were

established for Spain so that it could reach the level of prices

and freedom of movement of certain products (for example:

full aid alignment for oil production would last ten years;

seven years for poultry and “special” premiums for Spanish

sheep; a seven-year transition period for cattle and cereals;

ten years for the free movement of fruits and vegetables, etc).

These periods were shortened once the Single Market was

established in 1993.

It is worth noting that our country's entry into the EEC

facilitated the entry of large Community funds from the

European Agricultural Guidance and Guarantee Fund (FEOGA)

for the improvement and modernisation of the food industry

and the commercial networks at the source. This action had

definitive importance throughout the entire sector. Moreover,

the improvements in the industry, with high participation of

cooperatives, largely led the way for improvement in the

agricultural sector, as happened with olive oil, the meat

industries (an area in which incredible progress could be made

with the modernisation of the abattoirs), wineries, horticultural

centres, etc.

Also under the FEOGA Committees, the second half of the

1980s saw certain structural measures being applied, amongst

which the aid provided for farm improvement, which has

been quite active, and for the incorporation of youth and

early retirement are of special note. Nevertheless, despite the

efforts put forth towards the incorporation of youth, we must

acknowledge that success has been limited; it has not been

possible to slowdown the abandonment of the sector. With

regard to early retirement, the strategy of the Autonomous

Communities has conditioned this policy's success or failure,

with favourable results in very few of them. In short, these

policies have not been able to compensate for the ageing of

the sector, which is more pronounced in certain regions and

productions.

During this decade, the agricultural working population

dropped from 17% to 10%, revealing the overall loss of the

sector's weight. Along these same lines, agriculture's

contribution to final production at the end of the 1980s was

only 5%. With regard to land use, the most important

characteristic is the rise in irrigation (whose participation in

farmlands rose two percentage points) and in arable land,

while the participation of fallow lands and non-productive

lands dropped significantly and the woodlands remained the

same.

At the same time, the livestock censuses experienced very

sharp increases: cattle 14%, sheep 70%, goat 85%, and pigs

42%. The only drop was that of the dairy cattle census

(-14.2%), due to the planned application of quotas. Meanwhile

15

At the start of the 1990s, the entry into force of the

European Single Market put an end to the long adaptation

periods imposed on certain agricultural sub-sectors in Spain's

Treaty of Accession to the EEC. The cases of fruits and

vegetables and of oil are worth noting, since from that point

onwards these foods experienced a very marked increase.

The entry into force of the Single Market, which eliminated

much of the trade barriers between the member states, was

very important in the medium term for the increase in intra-

European trade. It also facilitated the creation of a European-

wide food system. On the other hand, the Structural Funds

Reform signified a sharp increase in the budgets available for

the improvement of structures and infrastructures through

the Social Fund, the European Regional Development Fund

(ERDF) and the FEOGA Committee, with a strong impact on

agriculture and Spanish rural affairs.

As regards agriculture, and always within the scope of the

EEC, the first years of the decade saw the approval of the

“MacSharry Report”, which proposed an extensive reform

of the Common Agricultural Policy (CAP), solidifying the

trends that had been emerging in previous years. Thereafter,

measures were taken that significantly changed the price

policy, separating aid (subsidies, compensatory indemnities,

1.3 The nineteen nineties: The start ofextensive reforms in CommunityAgricultural Policy

the breeding cow census rose significantly (over 85%). These

movements owed to the positive performance of intensive

pig farming and the implementation of aid for cattle, sheep

and goat farming. As a result, meat production rose an overall

30%, with a noteworthy increase of over 50% for pigs.

Total agricultural income almost doubled between 1980 and

1990, although it was still less than the average income and

the subsidies rose from 3.6% to 7.2%. In general the first

years after Spain joined the EEC were good for the sector,

despite the delay in the full accession for various products

(fruits and vegetables, oil, sheep, etc), which could not enjoy

all the advantages.

16

etc.) from the productions, as happened with cereals and oil

products. Likewise, the aid aimed at rural development was

increased, although it was still connected especially to

agriculture. In addition, a vision of this development was

introduced that extended beyond agriculture and which

manifested itself in the successive LEADER programmes. In

Spain these programmes were complemented with the

PRODER programmes, making it possible to cover a large

part of the territory. Of particular note, in this context, are

the existence of the agro-environmental measures and the

expansion of the mechanisms to support areas challenged

by mountainous terrain or depopulation, which are very

important in Spain. The Cork Conference in 1996 sought to

align the price policy with the new emerging vision of rural

development.

The MacSharry Reform had very important effects on the

herbaceous crops, since it brought domestic prices closer to

international prices and a compensatory indemnity was paid

for the loss of income that these signified. This indemnity

was related to the area and regional historical yields,

irrespective of each year's actual production. Thus, a new

philosophy emerged that limited the problems within the

scope of the international market, but introduced elements

of irrationality in the price policy and set the conditions for

its social delegitimation. Under this new philosophy, almost

all the Common Market Organisations (CMOs) were revised

throughout the decade.

Over these years, much of the legislative activity was marked

by the Commission's activity and the necessary transposition

of its rules. Some issues demanded significant changes, for

example, the quality policy had to be adapted, which in

Spain was still partially based on the distant Wine Statute

(Estatuto del Vino) of 1971. The most important Spanish

acts passed during this period were the Agri-food

Interprofessional Organisations Act (Ley de Organizaciones

Interprofesionales Agroalimentarias - 1994), which took a

long time to get started and even today is still weak, and the

Modernisation of Agricultural Farms Act (Ley de

Modernización de las Explotaciones Agrarias - 1995), which

aimed to boost the concentration of farms and foster their

modernisation, emphasising an increase in leasing.

At the end of the 1990s, the low participation of women in

the agricultural sector and their marginal position on farms

and in professional situations started to be taken into

account. Measures were slowly taken to remedy this situation

and a decade later, results were being seen in relation to

issues such as female participation, youth incorporation and

the LEADER and PRODER programmes. Nevertheless, the

sector is considered to be one of the most male-dominated

sectors of the economy, in addition to the very limited

opportunities for women in rural affairs, even after

experiencing slight improvement.

Between 1990 and 2000, the amount of farmland dropped

more than 9%, while irrigated land reached 18.6% of

farmland, an increase of more then three percentage points.

Within farmland, the amount of fallow land dropped during

this decade from 20.6% to 17.6%, while arable lands and

woodlands increased. Over these years, the mountainous

area increased by almost 4%, while the area dedicated to

other uses rose 13%. This last figure could be related to the

high rate of urban development that Spain has experienced

over the last 30 years.

The areas of the different crops underwent significant

changes that were caused by both the adaptation to the CAP

and the availing of the advantages that the European area

now fully provided to Spanish productions. The basic changes

were as follows:

Throughout the decade, the cereal area fell almost 10%,

while production continued to experience large fluctuations

due to weather conditions. This drop is primarily related to

the new aid system. The increase in livestock censuses,

especially with regard to fattening, resulted in an increase

in grain imports.

17

• The total wheat area increased 17%, but durum wheat

rose over 350% while common wheat dropped 18%.

These changes were due to the greater aid provided

for durum wheat, which resulted in the practical

disappearance of hard wheat in Andalusia, which the

flour factories then had to import from the international

market.

• As regards fodder grain, the area of barley dropped

25% while corn remained fairly steady.

• Rice experienced an almost 30% increase, also due to

the new form of regulation.

Amongst the industrial crops, the fall in the area dedicated

to beetroot is particularly noteworthy. It reached its peak

during 1993-1994, at which point it began a decline that

still continues today. The area fell almost 25% between

1990 and 2000.

Sunflowers underwent a similar process, with a maximum

area in 1993 and an overall drop during the decade of

30%. The drop in area continued until 2005.

The total vegetable area fell 20%, while total production

volume rose almost 10% due to the fact that the drop

occurred in the less-productive areas while the protected

area increased due to the strong performance of exports

to the EU.

The orange grove area hardly changed between 1990 and

2000. However, the tangerine grove area rose 47%.

Most of the fresh fruit trees experienced a drop in the

amount of area and an increase, in some cases very

pronounced, in production, due to the greater use of

irrigation and the fact that the productions were generally

more intensive.

However, the almond tree area has increased and

production has remained steady, also related to the aid

system.

The vineyard area fell 16% as a response to start-up aid,

while production stayed the same and even rose during

recent years thanks to the progress made in irrigation.

18

With regard to olive groves, area increased by 16% while

production rose around 50% with strong annual variations,

primarily due to the increase in irrigation and the

enhancement of new plantations.

With regard to the livestock censuses and productions:

During this decade, the pig census rose significantly, over

38%, while the cattle census rose 21%. In both cases,

these increases were the result of the good performance

of the domestic and foreign markets.

The dairy cattle census dropped 28% while the breeding

cow census rose 66%, both situations clearly due to the

CAP.

The sheep census remained steady while the goat census

dropped 21%.

Meat production rose over 40% during the decade. Of

special note were pig production, which increased 54%,

and cattle and poultry, both which rose 28%.

Despite the drop in the dairy cattle census, cow milk

production rose 8% thanks to the increased yield resulting

from the changes in food. Sheep milk production rose

22% as a result of the good performance of cheese.

In 1999, almost 1,800,000 farms were recorded in the

Agricultural Census, which was 21% less than in 1989. This

figure, which revealed a massive increase in concentration,

nevertheless reflected a very high number of very small farms,

which were unable to survive in the economic environment.

In comparison with these figures, the analyses conducted in

the discussions of the White Paper on Agriculture and Rural

Development concluded that the actual number of

moderately-professionalized agricultural farms did not exceed

440,000 in 1999:

In 1989, farms of less than 6 UDE (Economic Dimension

Units) represented over 83% and in 1999, 70%.

During these 10 years, the total work volume fell 12.2%,

primarily in extensive productions. The increase in the work

in the Technical-Economic Orientations (OTEs by their initials

in Spanish) of fruits and vegetables, olive groves, vineyards

and intensive livestock farming is particularly noteworthy.

Family work continued to predominate, although its

participation had fallen, dropping from 78% in 1989 to

69.3% in 1999. The 34% drop in work of family aid is of

special note. On the other hand, permanent salaried work

rose 44% while temporary work increased by 12.7%. One

important issue is the small size of most of the farms,

which prevented appropriate productivity and the

achievement of rational work organisation.

In 2000, the agricultural working population represented 7%

of the total, three percentage points less than at the start of

the decade. That year, agriculture's contribution to the Gross

Domestic Product (GDP) was less then 4%.

19

1.4 The first decade ofthe 21st century

The final years of the 20th century saw the approval of

the Agenda 2000, which aimed to prepare the EU for its

enlargement through the inclusion of the Eastern countries.

The Agenda expressly declared itself in favour of conserving

the environment and committed to food safety. The goals

that it undertook included modernising the European

agricultural model, minimising differences between regions

and limiting Community expenses. The final document

declared the need for an extensive reform of the CAP. The

sectors most affected were herbaceous crops, cattle meat,

dairy products (with guaranteed lower prices), wine,

processed fruits and vegetables, etc. The Agenda also

included new developments in rural development, considered

more agro-environmental measures and “ecologised” the

CAP, whose effects on our country included, amongst others,

the change of the Ministry's name, which is now the Ministry

of the Environment and Rural and Marine Affairs.

The decade kicked off with the Doha Round held by the

World Trade Organization, the aim of which was to continue

making progress in the area of world trade liberalisation.

The first years of this period were marked by the effects of

the health problems that affected European food during the

end of the 20th century, which were widely covered by the

media. This led to the drawing up of the White Paper on

Food Safety and the creation of European food safety

regulations, which entered into force in the middle of the

decade. Since then, it has conditioned the task of the

European food system, requiring agricultural farms, which

were exempt up until then, to strictly control their activities.

It favoured the verticalisation and transparency of the

activities in all phases by requiring traceability and the

application of hygiene standards, all of which arose from

Regulation EC 178/2002. The application of food safety

regulations must be understood as the Commission's

response to the warnings of European consumers, who were

aware of the CAP's costs. This application also entails an

extra cost in comparison with third-country products.

In 2003, the Intermediate Reform of the CAP was approved.

This Reform was founded on a new aid system that was not

linked to production. It was also based on historical

references and dependent on the fulfilment of a series of

legal requirements related to good environmental practices

in farming, food safety and animal welfare. If these

requirements are not fulfilled satisfactorily, the aid could be

forfeited. The basic concept lies in the decoupling of aid

from production. Although each country opted for a certain

decoupling index at first, there has been a growing trend

that is expected to lead to complete decoupling.222222222

This Reform sought to bring business decisions closer to the

market conditions and give more weight to environmental

issues and rural development, while addressing the serious

problem of the system's lack of social legitimacy. Its principles

have been applied to more productions, such as milk and

wine, processed fruits and vegetables, etc. and most of the

legislative activities have been focused, which is causing

important changes in the decoupled productions. In addition,

the CAP reform, which is planned for 2013, is focusing the

activities of all the member countries' agricultural

administrations. Several of these countries are already

drawing up documents on the agricultural outlook beyond

2020 and defining their future strategies.

Lastly, agriculture and energy have become more closely

related during this decade since the former has become,

through biofuels, a source of the latter supported by public

policies, together with the feeding of people and livestock.

Aside from the legislative initiatives aimed at embodying the

Community orientations, in Spain the enactment of the

Sustainable Rural Development Act is of special note. The

content of this Act, yet to be implemented, is related to the

agriculture of the Sustainable Economy Act, which is still

being passed through Parliament.

20

In 2007, global grain prices began to rise as a result of

financial capital entering the futures exchanges, the overlap

of bad harvests in the northern and southern hemispheres,

the absence of global stocks, growing deregulation, the

prospect of dedicating a percentage of production to biofuels

and the qualitative increase of consumption in emerging

countries. The stage was being set for the subsequent

economic and financial crisis. That rise had a very negative

impact on livestock farming and caused an increase in basic

foods with serious effects, especially on the poorest countries

and collectives. Also as a result of that crisis, the problem of

the lack of availability of sufficient food passed over the

entire world and world leaders placed food, and by extension

agriculture, on the political agenda. That rise in grains was

followed by a drop in prices with serious repercussions for

the agricultural sector.

This situation can be considered to be at the beginning of a

new operation of most agricultural product markets, in which

regular behaviours have fallen to the wayside and volatility

has become a hallmark against which an intervention

instrument is no longer available.

With this outlook, agricultural insurance policy, in which

Spain has a clear advantage, can expand its task to include

income insurance, playing an important role in the new

agricultural policy and introducing business criteria for risk

management in the sector.

Throughout 2008 and 2009, the economic and financial

crisis deeply affected the world and left its mark on the

agricultural sector. The most significant negative effects are

the difficulty in accessing credit, which calls into question

the continuity of the farms, the narrowing of margins

throughout the production chain, which stifles agriculture

and the companies involved in the subsequent phases, and

the fall in consumption, more in value than in volume,

especially in the higher price ranges. This places the

agricultural sector and its cooperatives in another situation

for which they are not prepared, while issues such as

structural deficiencies and lack of training have serious results.

In response to this new situation, which has delved deeply

into the inequality between the agricultural sector and the

subsequent phases of the production chain, especially

distribution, both the European Commission and the Ministry

of the Environment and Rural and Marine Affairs have

decided to analyse the food production value chain in order

to take action, placing many of the possibilities of better

farmer remuneration on the enhanced transparency of this

chain and on the improvement of the interphase relations

within it.

From the information available at the time this chapter on

the first decade of the 21st century was written, the following

was particularly noteworthy:

Between 2000 and 2007, overall farmland dropped almost

5% with varied behaviour: the area of fallow land and

unoccupied land rose, reaching 22% once again; arable

land (both dry and irrigated) dropped down below 50%;

while woodlands rose up to almost 28% as a result of

irrigation. The percentage of irrigated land has risen again,

now occupying over 21% of the farmland. There has been

a noteworthy rise in mountain area as well.

Total cereal area continued the drop that began during the

previous decade, while production remained steady with

large fluctuations. The area of other replacement crops,

like sunflower and pulse, has also dropped.

Vineyard area and production experienced few changes up

to 2007, despite the fluctuations. Subsequently, the

repeated low prices are leading to a significant start-up.

The olive grove area has grown, but at a slower pace than

in previous years. Nevertheless, production has continued

to grow, with large fluctuations, thanks to irrigation and

the entry into production of more intensive plantations.

As regards citrus fruits, the orange tree area has grown

over 8%, somewhat more than production, while the

tangerine tree area has risen more than 10%. It is worth

noting that the poor results of the recent seasons are due

primarily to the increase in the world supply and the

extensive entry into Europe of fruit from third countries.

21

The most important fruit tree crops have registered drops

in area of over 20%, generally accompanied by drops in

production.

The total garden produce area has slightly decreased, but

production volume and especially its value have increased.

Agriculture's participation in the economic activity of 2007

was below 3%, however food became the top

manufacturing industry. During the last decade, the

agricultural trade balance has remained highly positive

despite the growing grain importation.

Up until 2008, only the pig census increased (18%), while

the cattle and especially the sheep censuses have dropped

(3% and 20% respectively).

Until 2008, pig and poultry meat productions rose 20%,

cattle meat dropped slightly, and sheep and goat meat fell

by over 40%.

Between 2000 and 2008, the area of beetroot crops fell

almost 60% due to the new CMO, aimed at reducing

European production.

It is worth mentioning that the geographic location within

Spain of certain important productions is changing:

livestock farming, citrus fruit crops, etc.

In recent years, subsidies have contributed more than 25%

of the agricultural income as a result of aid system changes

and the alignment of prices with the international markets.

In 2008, the agricultural working population already

represented 4.3% of the total, with a 26% participation

of women, following a slight drop due to the role of safe-

haven sector that agriculture plays in the crisis.

The farms' experiences can only be monitored through the

Agricultural Farm Structure Survey (Encuesta de Estructuras

de las Explotaciones Agrarias), which is not comparable to

the Agricultural Census. According to this Survey, in 1997

there were 1,208,262 farms, in comparison with 1,036,210

in 2007. In other words, a 14% drop had been registered,

which was significant but not enough to have a collective of

adequately-sized farms. In reality, there has been a series of

atypical structural adjustment processes. Amongst these, task

outsourcing and the emergence of service companies

(especially in relation to machinery) in the agricultural sector

have been particularly noteworthy. This process has made

the concentration of work and management much greater

than the concentration of the farms. Thus, the work can be

organised better and a higher level of mechanisation and

efficiency is achieved.

All these changes, and the aid system in particular, have

caused significant modifications in land use. Also worth

noting are the drop in total farmland area, which has

occurred primarily since 1990, the drop in arable land as a

whole, and the pronounced increase in irrigated area.

2007 1980

Participation of the agricultural working population 4.3% 17%

Participation of agriculture in the GDP 2.8% 6%

22

1.5 Epilogue

Agriculture's low participation in the working population

and final production, after long years of reductions, leads us

to conclude that the sector has lost its interest for the

economy and Spanish society.

Nevertheless, agriculture continues to be a strategic sector

in Spain for several reasons:

On the one hand, the global crisis has placed food

amongst humanity's more serious problems and amongst

the strategic economic sectors for any country, whether

or not their authorities recognise it.

Agriculture is the basis of the local food systems, which in

turn are socioeconomic drivers in most of Spain's rural

areas, as it is an activity that is spread out throughout the

country and one on which the country depends.

Agriculture is the basis of the food industry, which in Spain

is the top manufacturing industry.

The food system as a whole, which includes agriculture,

comprises the largest Spanish production system.

The food system as a whole has a positive trade balance.

In addition, the food system is the most widespread of the

Spanish production systems and is present throughout the

entire country. This fact is even more relevant when one

takes into account that the depopulation of the central

area of the Iberian Peninsula is a very serious problem.

Over these years, agriculture has experienced significant

changes in response to the changes in agricultural policy, in

consumer habits and in societal organisation, as well as

economic and institutional changes, amongst others. These

changes have had multiple affects.

The contribution of vegetable productions rose from

56% to 60.3%.

The participation of fruits and vegetables rose from

22.4% to 35.7%.

The participation of olive oil rose from 3.6% to 4.7%.

The contribution of cereals and wine has dropped.

The contribution of livestock productions has dropped.

The contibution of meats related to intensive livestock

farming, especially pig and to a lesser extent poultry and

cattle, has remained steady.

The contribution of milk has dropped.

Main changes in the composition offinal agricultural production

The situation described in this work must be taken into

consideration with the far-reaching changes that are

occurring in the global food system, which directly affect

agriculture. Some of these changes started at the beginning

of the analysed period while others were already underway.

However, they have become more obvious and gained

importance in recent years:

Increase in the international flows of agricultural products,

intermediate products and finished products. This makes

it easier to relocate production and favours

competitiveness amongst agricultural products of different

origins, as it is more difficult to keep the production

systems isolated.

Globalisation of the sector's leading companies, those

which provide supplies as well as industries, merchants

and distributors. Agriculture and local companies are

hardly able to negotiate with these leading businesses.

Process and message globalisation and the growing

importance of the incorporation of R&D&I in all phases of

the chain.

Growing verticalisation of agriculture with the remaining

phases of the value chain, in such a way that strategic

production decisions are transferred to the leading agents

in exchange for greater efficiency.

Changes in consumer habits which lean towards their

homogenisation, the greater weight of advertising

messages, the destructuring of the main meal and the

decreased importance of passing knowledge and culture

down through families.

Growing role of distribution, with large globalised

companies, in determining consumption and in the

structuring of the production chain until reaching

agriculture.

2007 1980

Total farmland (ha) 17,397,000 20,500,000

Area of irrigated land (ha) 3,814,600 2,829,000

Area of arable land (ha) 8,691,500 10,660,000

Area of fallow land and unoccupied land (ha) 3,894,900 4,920,000

Area of woodlands (ha) 4,810,500 4,920,000

23

In short, since 1980, Spanish agriculture has been undergoing

massive changes that have been overlapping each other over

the years. Although it is very difficult to measure the scope

of each one, possibly those already experienced in the 21st

century and those which lie ahead due to new consumer

habits, business concentration processes driven by the crisis

and the new agricultural policy, those with greater scope are

those which have yet to be resolved.

It seems obvious that the agricultural sector, both Spanish

and European, is facing a new reality that does not include

the classic instruments of agricultural policy. New mechanisms

which include agricultural insurance, connection to the

territory and the remuneration of intangible assets such as

the conservation of biodiversity and the environment are of

special note, with issues as obvious as the fight against

erosion in much of Spain and water usage, and collaboration

within the production chain can occupy a preferential position

in the new policy.

Faced with this new situation, there are issues such as the

deficient structure of agricultural farms, lack of training of a

very high number of farmers and a low level of dedication,

which fosters a lack of professionalism. These issues signify

a clear non-competitiveness factor that must be addressed

with evident support mechanisms for the concentration and

revitalisation of the sector with both classic and new

mechanisms (crop sections in the cooperatives, Agricultural

Processing Companies (SAT by their initials in Spanish) for

joint farming, service companies, etc), with training policies,

technology transfer policies and instruments that make it

possible to face third-country competition and take

advantage of production in the European territory and within

the parameters of the European production model.

2 The Spanish agriculturalinsurance model. Structure.Milestones

26

This introductory chapter summarises the main milestones

that have marked the evolution and establishment of the

structure and operation of agricultural insurance in Spain. It

is a policy that has been and still is fundamental for our

country's agricultural and agri-food development and

therefore, for our entire economy.

The serious climatic problems experienced by our country

planted the seed for the creation of agricultural insurance

and its gradual development. Around 1917, there were some

twenty companies that operated in Spain which were

dedicated to insuring harvests against the risk of fire. There

was also a large group of friendly societies and mutual

insurance companies that insured livestock. In addition, some

foreign-capital companies offered protection against hail.

During that year, a mutual insurance company dedicated to

covering hail risk (Caja de Seguros Mutuos contra el Pedrisco)

was created and the Ministry of Development (the office that

handled agricultural affairs at that time) appointed a

committee that laid the foundations for a National Mutual

Insurance company specialised in hail.

The result was the appearance of the National Mutual

Insurance Company for Agriculture and Livestock (Mutualidad

Nacional del Seguro Agropecuario) in 1919. It was created

with the ambitious objective of covering all rural risks, but in

the end it focused exclusively on hail. The losses that this

Mutual Company had to cover were so much higher than

the premiums it received that the Government came to its

aid two years later, providing an annual subsidy of 250,000

pesetas (1.502,53 euros). In 1929, the Mutual Company

became the Rural Insurance Commissioner's Office (Comisaría

de Seguros del Campo), which in turn became the

Agricultural Insurance Service (Servicio de Seguros Agrarios)

in 1930. In reality, this latter entity acted as the Reinsurance

and Compensation Fund (Caja de Reaseguros y

Compensación).

In 1934, the Agricultural Insurance Service became the

National Rural Insurance Service. This entity operated until

1953, offering reinsurance policies to private insurance

companies for insurances against hail, fire and livestock

mortality. This organisation had a permanent deficit due to

the impossibility of balancing the premium income with the

indemnities paid for the insured losses. This situation depleted

its reserves and made it necessary to obtain special loans. All

the above led to the enactment of the Rural Insurance Act

of 1953, which entrusted agricultural insurance to private

enterprise. Later in 1954, the Act of the Insurance

Compensation Consortium (Consorcio de Compensación de

Seguros - CCS) was approved. Since then, a need that

experienced more and more demand began to grow: a

comprehensive agricultural insurance capable of covering

multiple risks. A system was needed that resolved the

problems of a deep-rooted and ineffective model that only

protected against unquestionable and continual risks.

Nevertheless, it wasn't until the 1970s that national

agricultural insurance underwent another significant change.

The year 1973, with the Fourth Development Plan in progress,

saw the arrival of the oil crisis and the steep rise in price per

barrel. It could be said that the currency reserves began to

dwindle at full speed as a result of the oil payments. Money

2.1 Brief summary of the historyof agricultural insurance inSpain(1)

(1). This chapter is a summary of the work prepared by AGROSEGURO in 2005, which extensively covers all the aspects commented here, as well as others that

have not been included. Some of the texts are literal transcriptions from this document: AGROSEGURO 1980-2005. The story of a great adventure. Published by

AGROSEGURO.

27

had to be saved and one of the expenses that could be

reduced was the purchase by the State of the entire wheat

harvest. Thus, a maximum limit was established. What was

not expected was the excellent cereal harvest of 1973, the

surpluses that resulted and the consequent fall in prices. This

factor reinforced the Government's decision to make the

harvest of that year and of future years subject to quotas.

From that moment onwards, farmers could plant all the

wheat they wanted, but the State would only buy cereal up

to a certain limit.

The agricultural seasons of the years 1973 and 1974 were

part of the reason for the creation of a Cereal Pool (Pool of

Co-insurance Entities of National Cereal Insurance), which

grouped together the insurance companies in order to

manage combined insurance. The Pool, which unified some

100 entities, faced a situation that was aggravated by

management difficulties. The first was the assumed obligation

of reaching all the farmers and establishing an effective

management network for that purpose. On the other hand,

it was known that competition was going to be intense

between companies and it was essential to avoid resentment

arising from inequality between the farmers when assessing

the losses.

The Confederation of Saving Banks (Confederación de Cajas

de Ahorro) was consulted to resolve the first problem. This

entity was present in almost all parts of the country and in

all the Spanish rural areas. For the second problem, a

“gentlemen's agreement" was reached amongst the entities

and common adjustment systems were studied, unifying the

criteria and handling neighbouring farms in the same way in

the event of a loss.

Approved on 27 October 1977, the Moncloa Pacts (Pactos

de Moncloa) included the agreement to present an

Agricultural Insurance Act before the lower house of the

Spanish Parliament (Congreso de los Diputados). This new

legal text was to replace the Act of 1953 which, despite the

efforts that were made, had not achieved the expected

results. Lastly, Combined Agricultural Insurance Act 87/1978

was approved in December 1978. Almost a year later, in

September 1979, Royal Decree 2329/1979, which approved

its implementing regulation, was passed.

This Act appeared at a time when 17% of the Spanish

working population was employed by the agricultural sector,

which created settlement areas in the countryside. The new

Act created a series of institutions which, in addition to other

important players, have provided the Spanish Agricultural

Insurance System with unique value and significant stability.

It is a System in which public and private entities co-exist

together. It is based on voluntary participation, from both

insurance companies as well as from the agricultural and

livestock farmers themselves, and consists of subsidies from

the Central Government and the Autonomous Communities.

The main Institutions that comprise this insurance structure

are the State, through the Spanish Agricultural Insurance

Agency (ENESA), the General Directorate of Insurance and

Pension Funds and the Insurance Compensation Consortium

(CCS). In second place are the Autonomous Community

governments that supplement the subsidies for the

procurement of agricultural insurance. Third are the

Agricultural Professional Organisations, which represent the

agricultural and livestock farmers. And lastly, the insurance

carriers, grouped together in AGROSEGURO.

2.2 Structure of the agriculturalinsurance system

The Spanish Agricultural Insurance Agency (ENESA) was

created by Royal Decree 2650/1979 of 11 October as the

self-governing commercial entity belonging to the then

Ministry of Agriculture, Fisheries and Food.

The two main objectives that the legislation entrusted to

ENESA were the drawing up of the Triennial Conditions and

the Annual Agricultural Insurance Plan, which must be

approved by the Council of Ministers and, at the same time,

the drawing up of the Ministerial Order, which set the

governmental criteria for the assignment of subsidies at the

price of insurance for the different vegetable and animal

productions which the System protects.

The budget which supports these subsidies is included in the

budget of what is now the Ministry of the Environment and

Rural and Marine Affairs (MARM) and is managed and

administered by ENESA. Other functions which this entity is

responsible for are:

• Establishing the minimum technical conditions for farming

(which are incorporated into the set of clauses of the

insurance policies taken out by farmers, the violation of

which can result in the denial of the loss by the adjusters

in charge of assessing the damage); the insurable crop

yields; the prices for the purposes of insurance and the

deadlines for taking out each insurance

• Conducting the necessary feasibility studies that show

the insurability of the risks which are to be covered

through the System.

28

ENESA, presided over by the Undersecretary of MARM, is a

top decision-making entity with a General Committee, which

is comprised of representatives from MARM, the Ministry of

the Treasury, the Agricultural Professional Organisations and

Cooperatives, AGROSEGURO (since 1997) and the

Autonomous Communities (since 1998) which have been

participating in this Committee's meetings in a rotational

manner.

Closely related to this General Committee (which is, in a

manner of speaking, at the vertex of the pyramid) are two

instruments of collegial participation in the System. The first

is the Regional Committees (now led by the respective

Autonomous Communities) which channel, as a discussion

forum, the proposals from the Agricultural Organisations and

Cooperatives related to the development of agricultural

insurance. The second is the Work Groups (selected by

ENESA), which analyse not only the proposals that are finally

made a reality by the Regional Committees but also any

other issues related to the Annual Plans and their effective

implementation.

These are the procedures put in place by the System in order

to facilitate participation by all the involved public and private

Institutions in the design and adaptation of the different lines

of insurance to the actual interests of their target audience.

2.2.1 ENESA

STATE AUTONOMOUSCOMMUNITIES

AGRICULTURALSECTOR

PRIVATEINSURANCE

MINISTRY OF THE ENVIRONMENTAND RURAL AND MARINE AFFAIRS

MINISTRY OF THETREASURY

SPANISH AGRICULTURALINSURANCE AGENCY

GENERAL DIRECTORATE OFINSURANCE AND PENSION FUNDS

INSURANCE COMPENSATIONCONSORTIUM

AGRICULTURALORGANISATIONS

AGROSEGURO, S.A.

29

In the insurance world, reinsurance offers the possibility of

lessening the impact of the loss on the results, while at the

same time increasing the ability to assume risks, as it

diversifies the entire portfolio's exposure to the possibility of

ruin.

In the agricultural insurance sector, where the financial

consequences for both the insured parties and insurance

companies can reach catastrophic levels due to weather-

related or epidemiological events, reinsurance has an

absolutely determinant importance. It could be said that in

this sector, more so than in others, reinsurance is that which

“determines” the possibility or impossibility of covering a

risk.

Combined Agricultural Insurance Act 87/78 decided to

reserve the role of reinsurer for the Insurance Compensation

Consortium: “…This Consortium shall assume those risks or

carry out the compensation for excess loss in the manner

which has been determined by the relevant regulations for

each case”. (First Additional Provision. Five).

The Implementing Regulation of the Act, dated 14 September

1979 (Section 45), expressly sets forth the functions that

must be carried out by the Consortium, amongst which the

following are particularly noteworthy:

a) “To act as mandatory reinsurer in all branches of this

insurance, in the manner and amount determined by the

Ministry of the Treasury”;

b) “To manage the loss adjustments with a view to fulfilling

its function as reinsurer as effectively as possible…”; and

c) “To assume, by way of exception, the management of

direct insurance when so agreed by the Government in

the cases set forth in Section Forty-Three…”

It could be said that these three functions have been

effectively carried out by the Entity over the thirty years of

the System's history, making it a key player in the System's

positive development and revealing the usefulness and need

for public support of this activity that covers the risks to

which the agricultural sector is subject.

With regard to the last of the abovementioned functions,

the Consortium eventually held 49.65% of AGROSEGURO's

capital, which meant that, as a direct insurer, it would cover

this same percentage of total risk assumed by the Co-

insurance Pool during the most difficult years of the System,

thus facilitating its survival and gradually stepping back as

the private insurance companies increased their participation

in the Pool.

2.2.2 Insurance compensationconsortium

30

With regard to the second function, the Consortium has

been regularly and systematically exercising its control of the

adjustments that, season after season, have been carried out

by the professionals that provide their services to

AGROSEGURO.

Lastly, as a mandatory reinsurer of the System, its protection

has also been evolving as the System itself has been evolving.

Thus, during that first phase that took place from 1980 to

1987, the Consortium assumed, through the “excess loss”

mode, 95% of the loss that exceeded 100% of the

commercial premiums of all the insurance lines included in

the Annual Plans. This, together with other factors related

to the weather and the lack of an appropriate rate fixing

system, resulted in very high losses for this Entity during this

first phase and until the mid-1990s, due to the carrying out

of this function. Consequently, it had to resort to the cover

provided by the State.

Since 1988, and as a result of the very important measures

agreed in 1987, the Consortium has had a double

reinsurance system: an “excess loss” mechanism for the lines

classified as “viable” and a “stop loss” mechanism for the

second group, which is comprised of the "experimental

lines" and for which the Consortium would compensate the

excess loss above 601,000 euros.

YEAR ENTITIES CONSORTIUM

NUMBER % CAPITAL % CAPITAL

1980/84 92 100 --

1985 88 60.32 39.68

1986 82 52.28 47.72

1987 75 50.35 49.65

1988 63 56.42 43.58

1989 62 62.92 37.08

1990 66 70.22 29.78

1991/92 64/63 83.97 16.03

1993/05 60/35 87.5 12.5

2006/09 33/27 90 10

31

1988-2005 PHASE

EXPERIMENTAL LINES

VIABLE LINES

The following table shows the operation of this protection

mechanism from 1988 to 2005, inclusive:

FIRST €601,012,10

LOSS

EXCESSLOSS

PREMIUMS

REMAINDER

CONSORTIUM

ENTITIES

OVER 160 % OF THE COMMERCIAL PREMIUMS

FROM 130% TO 160%OF THE COMMERCIAL PREMIUMS

FROM 90% TO 130%OF THECOMMERCIAL PREMIUMS

FROM LOADED RISK PREMIUMTO 90% OF THE COMMERCIAL PREMIUMS

EXCESSLOSS

LOADEDRISKPREMIUMS

COMERCIALPREMIUMS

LOSS

100

90

95

50

10

5

50

CONSORTIUM

ENTITIES

32

2006-2007 PHASE

In 2006, the Consortium partially modified this protection

mechanism through the following operation plan, thus

introducing “profit participation”:

EXPERIMENTAL LINES

REMAINDER(From € 3,000,000)

72.5 27.5

LOSS

OVER 90 % OF THE COMMERCIAL PREMIUMS

FROM THE LOADED RISKTO 90% OF COMMERCIAL PREMIUMS

EXCESSLOSS

LOADEDRISKPREMIUMS

COMMERCIALPREMIUMS

CONSORTIUM

ENTITIES

OVER 160 % OF THE COMMERCIAL PREMIUMS

FROM 130% TO 160%OF THE COMMERCIAL PREMIUMS

FROM 90% TO 130%OF THECOMMERCIAL PREMIUMS

FROM LOADED RISK PREMIUMTO 90% OF THE COMMERCIAL PREMIUMS

EXCESSLOSS

LOADEDRISKPREMIUMS

COMMERCIALPREMIUMS

LOSS

100

90

80

50

10

20

50

CONSORTIUM

ENTITIES

VIABLE LINES

33

FROM 2008

Lastly, since 2008, the Consortium's loss compensation plan

has been aligned with the following approach:

a) For the experimental lines, the Consortium compensates

all excess loss over the loaded risk premium that exceeds

three million euros.

LÍNEAS VIABLES

OVER 160 % OF THE COMMERCIAL PREMIUMS

FROM 130% TO 160% OF THECOMMERCIAL PREMIUMS

FROM 90% TO 130%OF THECOMMERCIAL PREMIUMS

FROM LOADED RISK PREMIUMTO 90% OF THE COMMERCIAL PREMIUMS

EXCESSLOSS

LOADEDRISKPREMIUM

COMMERCIALPREMIUMS

LOSS

90

80

50

10

20

50

95 5

CONSORTIUM

ENTITIES

The immediate consequence of the approaches of this last

phase is that the insurance companies grouped in the pool

were more exposed to risk, which has led to the need for

greater reliance on the international reinsurance market in

order to cover the part that is not assumed by the

Consortium. In other words, the System is opened up even

more to what we could call traditional practices of the

markets, without renouncing the philosophy that inspired its

creation: the public-private partnership.

b) For the viable lines, a new protection “interval system” is

established, as shown in the following graph:

EXPERIMENTAL LINES

CONSORTIUM

ENTITIES

LOSS

EXCESSLOSS

LOADEDRISKPREMIUM

95% 5%

2% NETCOMMERCIAL

PREMIUM EXCESS

The lines Collection and Disposal of animals (C&D) as well as the experimental lines will be treated as separateT.

Throughout these thirty years, the Insurance Compensation

Consortium has paid 997.51 million euros in compensation

for excess loss and has created a Stabilisation Reserve in the

amount of 722.4 million euros, which ensures that it can

handle situations of extreme loss on its own.

34

2.2.3 AGROSEGURO

PRODUCTION AND COMMUNICATION AREA

RESEARCH AND DEVELOPMENT AREA

CLAIMS AREA

MANAGEMENT AREA

ORGANISATIONAL AND IT AREA

Agrupación Española de Entidades Aseguradoras de los

Seguros Agrarios Combinados, S.A. (AGROSEGURO) was

created for the purpose of managing, in the name and on

behalf of the insurance companies that belong to the co-

insurance pool, all that which is related to combined

agricultural insurances, thus fulfilling one of the provisions of

the Regulations of Act 87/78 in its Section 41.

Twenty-five insurance companies took part in the creation of

this public limited company (17 April 1980) with an initial

capital of one million pesetas (equal to 6,010 euros). That

same year (29 July), the number of insurance companies rose

to almost eighty, increasing the capital up to 25 million

pesetas (equal to 150,253 euros).

Currently, at year end 2009, AGROSEGURO, S.A. has a share

capital totalling 9 million euros and 27 shareholders, including

the Insurance Compensation Consortium.

Although it is not an insurer, due to express imposition of the

Regulations of Act 87/78, it has an organisational chart that

is similar to that of an insurer in order to facilitate the

relationship with the entities that belong to the pool.

Each insurance company's participation in the share capital

equals its participation in the total risk assumed by the pool

and, consequently, in the final result of each year. This

participation can vary, and in fact it does, from one year to

the next, in accordance with the company's Bylaws, which

set forth the business contribution that each insurance

company has made to the pool during a certain period of

time as one of the main criteria for determining the amount

of this participation.

Once the amount of the respective premiums has been

received, AGROSEGURO S.A. carries out amongst others the

following functions: issues the policy and respective bill;

receives the loss claims; assesses the damage and calculates

the indemnity to be paid; pays for the losses; and prepares

the pool's quarterly and annual accounts.

In addition to these functions, it also prepares the tariffs that

correspond to the different lines of insurance based on its

own statistical data, which are obtained from the respective

series of losses; it draws up the set of clauses for the policies

and participates, together with ENESA and the General

Directorate of Insurance and Pension Funds, in the

preparation and drawing up of the different adjustment rules

that are applied during damage assessment.

Consultancy and international relations

AGROSEGURO ORGANISATIONAL CHART

PRESIDENCY

GENERAL

Legal Department

Regional Directorates

35

2.3 Milestones in the evolutionof the system created in1978

2.3.1 The Constitution of 1978

Even though the current Agricultural Insurance System has

a short history, a series of events that could very well be

considered milestones have taken place, marking its

evolution.

The first of these, which has been in existence for the same

amount of time as the System, is the Spanish Constitution,

passed just a few days before the approval and publication

of Combined Agricultural Insurance Act 87/78 of 28

December, to the point that this Act is normally considered

the first Spanish Constitutional Act of this new era in our

country's history.

The Constitution's impact on the System is undoubtedly

determined by the role that it assigns to the Autonomous

Communities. Thus, as this decentralisation model has

become more and more established, the Autonomous

Communities have been increasing their support for the

System, basically through complementing, with their

contributions, the contributions that the Central

Administration makes to the lines of insurance related to

vegetable and animal productions, which are more

representative or more socially or economically interesting

for the Community in question. That greater involvement

has been validated by the gradual increase of their

participation in the financing of insurance premiums, which

rose from no participation during the first eight years of the

System to 4.78% of the total financing in 1988 (the first

year in which three Autonomous Communities provided

financing) and to 28.47% in 2009.

36

2.3.2 Entry into the EuropeanCommunity

When Spain formally entered the EEC on 1 January 1986,

the Combined Agricultural Insurance System had completed

its fifth year of existence by integrating itself, as the group

of the Spanish insurance sector and its institutions (e.g. the

Insurance Compensation Consortium), into the normal

operation of an insurance market which already focused on

concepts such as freedom of establishment and freedom of

providing services.

Despite its small size during those first years and the

difficulties it had to overcome, the System was able to

maintain a reasonable growth rate, so much so that in April

1995 the European Parliament (P-1161/95; Official Journal

of the European Communities No. C/202/46 of 7.8.1995)

posed a written question to the Commission regarding the

compatibility of the aid that the Spanish State was providing

to the agricultural insurance premiums with the provisions

of Section 92.2 of the Treaty on European Union, related to

the compatibility of aid designed to repair damage caused

by natural disasters with the Common Market.

Mr. Fischler's response, dated 3 May 1995, on behalf of the

Commission, analysed the criteria in force and concluded

that "provided the measures of state aid respect these

criteria, the Commission considers them to be in accordance

with the provisions of the Treaty". This could be the first

important recognition of a System whose structure and social

utility began to be acknowledged beyond our own borders.

But it was not until November 2001 that the Government

officially put on the table the issue of the Formal Fulfilment

of the requirements of the EU Treaty in respect of the Spanish

Agricultural Insurance System. The response from the

Commission's Directorate-General for Agriculture, dated 30

January 2002, concludes that “the aid provided to

agricultural insurances complies with the conditions set forth

in Section 11.5 of the Guidelines (from 1.2.2000) and can

benefit from the exception set forth in letter c) of Subsection

3 of Section 87 of the Treaty…”.

This Commission Resolution could be considered the official

recognition of the System's adaptation to the Community's

rules. This adaptation was still in force when the European

Commission of 27 member states finally recognised, for the

first time, the usefulness of agricultural insurance as an

instrument that stabilises agricultural income, creating the

possibility of allocating a part of the funds reserved for the

“second pillar” towards subsidising the cost of the premiums

for these types of insurances (Sections 69 and 70 of Council

Regulation (EC) No. 73/2009 of 19 January 2009).

From that moment onwards, there have been two channels

for financing agricultural insurance premiums in the European

Union: the abovementioned Regulation No. 73/2009 and

Commission Regulation No. 1857/2006 of 15 December

2006. Our country continues to use this second, older option

because, in theory, it is considered to be better adapted to

the System's special characteristics and because it is

exclusively financed by the General Budgets of the State and

of the Autonomous Communities, amongst other reasons.

37

2.3.3 Classification of the lines ofinsurance and reinsurance

If starting up insurance activity is always complicated, getting

the Spanish Agricultural Insurance System off the ground

could not avoid this rule: in addition to the weather-related

factors, with conditions that were especially harsh for the

herbaceous crops during those first years, there was also:

the lack of technical and statistical knowledge regarding the

performance of the different crops; the consequent lack of

appropriate rates; adjustment procedures that undoubtedly

did not help with loss management; and certain mechanisms

that the Administration used to pay the subsidies, which

created financing difficulties for the System's operations;

and, last but not least, a reinsurance cover that was clearly

insufficient.

The continual losses that these conditions created for the

insurance companies that belonged to the Co-insurance Pool

caused many of them to gradually leave. Thus, in 1985,

participation in the Pool was divided as follows: 60.32% for

private insurers and 39.68% for the Consortium. This

situation continued to worsen and by 1987, these figures

had changed to 50.35% for insurance companies and

49.65% for the Consortium. The Consortium became one

of AGROSEGURO's shareholders under Additional Provision

Five of Combined Agricultural Insurance Act 87/78 and

Section 43.2 (Principle of Subsidiarity of the State) of its

Implementing Regulation dated 14 September 1979.

Nonetheless, the year 1987 marked the lowest point of the

crisis. As a result of the work started in 1986, this year saw

the adoption of two measures that, at the end of the day,

became essential for resolving this situation: the classification

of the lines of insurance into “viable” and “experimental”,

in such a way that a special protection system was established

for the latter; and the modification of the excess loss

compensation system by the Insurance Compensation

Consortium in order to limit the possible losses of the co-

insurance companies at levels that were clearly less than

those experienced during the first seasons.

These two measures, which were not the only ones adapted

at that time, have contributed since then to the growth and

strengthening of the System and to the assumption by the

private insurance companies of a predominant role in the

Pool.

Thus, in 2009, the Consortium's participation in the Co-

insurance Pool was 10%, leaving the rest to the private

insurance companies. The “viable” lines represent 27.28%

of the net premiums, while the "experimental" ones

represent 72.72%. The latter includes the lines of collection

and disposal of dead animals on the farm.

38

2.3.4 Insurance for covering expensesdue to lack of grazing lands

This insurance, which appeared for the first time in the

System in the 2001 Plan, was created to compensate livestock

farmers for the increase in costs to feed their livestock due

to a lack of grazing lands on extensive livestock farms.

The importance of the qualitative leap represented by the

appearance of this new cover amongst those offered by the

System is enhanced by the following circumstances that

occurred in the management of this insurance, amongst

others:

• It is index insurance, unknown up until now in the

agricultural insurances marketed in our country.

• It is based on the use of satellite images and on the

handling of these images, in Spain, by the Remote

Sensing Laboratory of the Department of Applied Physics

at the University of Valladolid (LATUV), consisting of

calibration, georeferencing, atmospheric correction and

extraction of NDVI (Normalised Difference Vegetation

Index) values.

The conjunction of different technologies and sectors is thus

produced: scientific, provided by satellites and university

research; computer-related, which makes it possible to use

the obtained information for insurance purposes; and

insurance-related, which through the actuarial technique sets

the price of the cover based on factors such as the frequency

and intensity of the damage produced by the risk in question.

Bovine spongiform encephalopathy (BSE), better known

as “mad cow disease”, appeared in the year 2000 and cost

the European cattle sector at least 92 thousand million euros,

making it the most costly disease to ever affect European

cattle. This disease sparked the greatest volume of legislation

ever passed by the EU's regulatory bodies and required the

national institutions to establish a series of measures aimed

at preventing, controlling and eradicating this disease.

Amongst the measures that were approved, Regulation (EC)

No. 99/2001 defines the concept of “specified risk material”,

SRM (the name by which this insurance line was first known),

which includes the dead animals of the ruminant species and

requires the transformation and elimination of the human

and animal food circuits.

Later, Regulation (EC) No. 1774/2002, which went into force

on 1 May 2003, generally required incineration or

transformation in specific industries for the two categories

of “ruminant species” and “rest of the animals” that died

on the farm.

The political decision to manage these issues through the

Agricultural Insurance System by means of a cover of the

type offered by the assistance insurances signified a very

2.3.5 Insurance for the collection anddisposal of dead animals on the farm1)

(1). En adelante, R y D.

large technical and insurance management challenge. It

consisted of not only setting a price for this service, but also

something more complicated: coordinating with the different

Autonomous Communities, as they are the ones that

designate and authorise the companies that carry out the

tasks of collection and transport to the incineration plants;

determining the routes for pick-up and, if applicable, the

cases in which a veterinarian must accompany the carrier to

collect the respective samples which must be analysed in the

laboratory; and creating a system for the receipt of "loss

notifications", so that they can be sent immediately to the

appropriate management company to ensure that the

collection takes place within a period of no longer than 24-

36 hours.

In light of this last issue, AGROSEGURO created its own Call

Centre, which provides personalised service 365 days a year,

and an IVR (Interactive Voice Response) service which

attended to almost 584,000 calls in 2009. This last service is

only for livestock farmers in the five Autonomous

Communities where this management is offered.

However, in addition to this cover for which the livestock

farmer pays around 25% of the premium, with the State

and Autonomous Communities paying the rest, the creation

of this insurance line during the second half of 2001 has

facilitated better knowledge of the actual volume of different

livestock species in Spain (cattle, non-cattle, pigs, poultry,

horses, etc.) by means of control by the insurance manager

(AGROSEGURO) of the possible cases of underinsurance or

overinsurance. These cases can be detected through cross

information from the farmers' insurance applications and the

collection notifications (more than 192,000 and 899,000,

respectively, in 2009).

As part of the prevention and improvements of this activity's

sanitary conditions, there is the control, also by the insurance

manager, of the biosafety measures in which this activity is

carried out: a watertight body in the trucks in order to

prevent liquids from leaking; automatic closure of the trucks'

upper doors; installation in the vehicles of a disinfection

system for the wheels and underside; insecticide devices

inside the body to prevent epidemiological risks.

These lines of insurance which, as has been mentioned, were

incorporated into the System during the second half of 2001,

service all the Autonomous Communities except Cantabria,

La Rioja and the Basque Country. They have a reserve of

accrued net premiums in 2009 of 157.25 million euros,

which is the highest amongst all the lines offered by the

System, with 24.20% of all the premiums in this year. More

than 95% of the cattle livestock (5,164,312 animals) are

insured, as are 80% of the rest of the species overall

(244,271,349 animals/places).

Their implementation signifies, without a doubt, a very

important milestone for the System, not only because of the

volume of premiums it provides, but also because it

represents openness to other types of insurance and services

that were unthinkable in 1980.

39

3 Insured Productions

42

The Law of 1978, which set forth the conditions for the

development of the current Agricultural Insurance System

had two important strengths, amongst others, that have

been maintained since the beginning and which have

fostered its systematic progression since then. The first

strength is the establishment and practice of what is known

today as a “public-private partnership”, integrating the

actions of the Public Administrations, Agricultural

Organisations and private insurance sector. The second is the

adoption of some of the most classic principles of the

insurance practice, amongst which the following are

particularly noteworthy: the principle of its implementation

“in a gradual manner based on productions, areas and

risks…” (Sec. 4) and that of the diversification of the risks to

be covered, in order to favour their dispersion and reduce

exposure to negative financial results.

Based on this philosophy of prudence, imposed many times

by the actual difficulty of the task to be performed, the

System gradually incorporated productions and risks in such

a way that today we can say that all the country's vegetable

productions have at least one series of basic covers for which

they can sign up.

43

The first Combined Agricultural Insurance Plan was approved

by the Council of Ministers on 30 May 1980 with the

following lines:

• Comprehensive Winter Cereals Insurance (experimental

plan for 10 regions with 50% cover), covering frosts,

droughts, floods as well as hot and/or hurricane winds

once stem elongation had taken place during the

harvest of 1981.

• Wine grape insurance, throughout the entire country,

with 100% cover. Covered risk, hail.

• Apple insurance, throughout the entire country, with

100% cover. Covered risk, hail.

• Tobacco insurance, throughout the entire country, with

100% cover. Covered risk, hail.

• Combined insurance for citrus fruits (orange, tangerine,

lemon and grapefruit) for 15 provinces, covering frosts

(50% cover) and hail (100% cover).

These five lines of insurance were the beginning of the

System. With the 1981 Agricultural Insurance Plan, this

number was increased to seventeen (including a line for

comprehensive cattle insurance) and later to twenty-two with

the 1984 Plan.

The System's gradual expansion towards new vegetable and

animal productions has not stopped growing since, despite

the serious difficulties that were experienced during the first

years until 1987.

This evolution (which, for the current purposes of this

publication finishes in 2009) has resulted in 114 vegetable

production lines; 14 livestock production lines; four

aquaculture production lines, with the first line for fish farms

dating back to 1996; nine lines for the collection and disposal

of dead farm animals, with its first implementation in 2001;

and one forestry production line, implemented for the first

time with the 2006 Plan.

The enhancement of productions and covers can easily been

seen in the enumeration that the annual Agricultural

Insurance Plan carries out each year. This Plan also groups

together the different lines, normally by type of insurance.

3.1 Families of lines and linesof insurance. Evolution andtimeline

44

3.2 Insured agricultural areaand production

As mentioned in the previous point, the System has

significantly evolved over its thirty years of existence in all its

aspects. New productions and risks have been incorporated

and there has been a sharp increase in the procurement of

insurance as a response from the agriculture and fishing

sector, which is resulting in high implementation levels in

most productions.

YEAR HECTARES PRODUCTION IN KG

1980 57,209 321,675,000

1981 3,985,665 10,245,039,000

1982 3,482,268 8,907,546,000

1983 3,906,913 10,969,710,000

1984 6,017,067 17,165,459,000

1985 4,950,811 15,924,057,000

1986 4,224,215 13,329,774,000

1987 4,119,504 12,888,909,000

1988 4,107,665 14,708,916,000

1989 4,119,046 14,843,574,378

1990 4,016,812 15,069,483,488

1991 4,427,675 16,603,294,328

1992 4,326,930 15,947,287,603

1993 4,397,879 17,133,216.888

1994 4,358,847 17,514,606,284

1995 4,820,530 17,464,513,606

1996 5,065,332 22,006,749,379

1997 4,985,778 20,786,762,298

1998 5,489,366 24,440,601,309

1999 5,584,778 26,100,189,971

2000 5,983,686 28,947,089,387

2001 5,494,699 25,679,601,067

2002 5,375,994 25,932,471,806

2003 5,469,817 26,880,467,106

2004 5,865,086 28,000,280,286

2005 6,186,686 26,368,603,947

2006 5,542,795 25,559,151,113

2007 6,205,877 29,966,648,379

2008 5,792,676 29,408,213,169

2009 5,522,507 27,302,279,842

Evolution of the number of hectares and kg ofagricultural production that are insured.kkkkll

45

Below is a brief descriptive analysis of the evolution of the

main sectors that comprise the System, without going into

the particular situation of each insurance in specific

geographic areas.

In order to provide an overview of each sector, we have taken

the average percentage of production implementation, area

and, if applicable, of animals or places for every 10 years

since the start of the System.

Insured agricultural area (millions of Ha)Insured agricultural production (thousand millions of Kg)

0

5

10

15

20

25

30

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

46

These crops are primarily located in the Autonomous

Communities of Castilla y León, Andalucía y Castilla-La

Mancha, where the prevalence of cereal is evident, occupying

around 70% of the total area. Barley is the predominant

crop.

The evolution of the production of all the cereals over the

last thirty years has experienced normal fluctuations of the

typical weather-related variability, especially the annual rain

amount and distribution. This situation, together with the

customary fluctuations due to prices and the impact of the

CAP measures, which have been abundant and varied,

especially during the last two decades, have been a large

determining factor for this sector's performance.

The average yield of all the cereals has increased around

1T/ha, which can be attributed to the improvement of the

varieties planted and of the farming techniques, without

forgetting the differences of dry and irrigated farmland.

From the insurance perspective, as commented at the start

of this chapter, the comprehensive winter cereal insurance

has existed since the beginning of the System, developing

over the entire period. It currently offers farmers a varied

range of insurance options. In this regard, the yield insurance

for extensive herbaceous crops, which was created during

the 2000 harvest, makes it possible to establish maximum

insurable yields and customised rates for farmers. Thus, more

crops can be insured and greater coverage can be provided

than with tradit ional comprehensive insurance.

Decades

80-8990-9900-09

Averageinsurablearea (ha)

6,920,4887,179,5077,679,544

Averageinsured

area (ha)

3,982,0923,677,2555,110,996

% Ofinsured/

insurable area

57.5451.2266.55

% Of increase in insured

area compared

witch previus period

-7.6628.35

Average insured

production (mt)

10,906,55110,933,98214,948,581

% Of insured/insurable

production

80.1670.1964.22

% Of increaseinsured

productioncompared with

previousperiod

0.2537.06

Average insurable

production (mt)

13,605,82015,576,60823,275,880

00-09

0

2,000,000

90-9980-89

4,000,000

6,000,000

Increase in Insured Area (ha)

00-09

0

5,000,000

90-9980-89

10,000,000

15,000,000

20,000,000

Increase in Insured Production (mt)

EVOLUTION AND IMPLEMENTATION IN EXTENSIVE HERBACEOUS CROPS

There is no doubt of the importance this sector holds for our

country, representing around 11% of final plant production.

This section refers to the most representative stone and pome

species in agricultural insurance: peach, apple, pear, apricot

and plum. Their average production in recent years has been

around 3 million tons, representing around 85% of the total

amount of all the species in the fruit sector.

Its importance has become evident in agricultural insurance

due to the high number of insurance options (combined

insurance, farm insurance and yield insurance), reaching a

high level of development and improvement that covers

almost all weather-related risks.

Decades

80-8990-9900-09

Averageinsurablearea (ha)

170,908223,156213,950

Averageinsured

area (ha)

26,80598,336116,606

% Ofinsured/

insurable area

15.6844.0754.50

% Of increase in insured

area compared

witch previus period

266.86335.02

Average insured

production (mt)

322,9821,424,1712,057,832

% Of insured/insurable

production

15.3054.6572.87

% Of increaseinsured

productioncompared with

previousperiod

340.94537.13

Average insurable

production (mt)

2,110,4362,606,0482,824,140

EVOLUTION AND IMPLEMENTATION IN FRUIT TREES

00-09

0

20,000

90-9980-89

40,000

60,000

80,000

100,000

120,000

140,000

Increase in Insured Area (ha)

00-09

0

1,000,000

90-9980-89

2,000,000

3,000,000

Increase in Insured Production (mt)

The consolidation of farm insurance has been decisive in its

evolution. Since its implementation in 1999, this type of

insurance has incorporated new risks and a frost risk cover

at a reduced price as it covers damage for the entire farm

and not by plot, as is the case with combined insurance. This

situation, together with the preferential subsidies policy in

favour of insurance lines that offer greater protection to

agricultural and livestock farmers, have contributed to the

expansion of insurance in this sector.

47

48

EVOLUTION AND IMPLEMENTATION IN CITRUS FRUITS

This sector, which is also of great importance in the Spanish

Agricultural System, comprises the most important fruit tree

group with regard to fruit growing area (60.9%), followed

by the stone and pome fruit trees with 11.7%.

By species, the orange tree is the crop with most citrus area,

covering 50% of the total area, followed by the tangerine

tree with 36% and, to a lesser extent, the lemon tree with

13%.

The main production area is the Community of Valencia with

60% of the total area. Andalucía and the Murcia region are

the Communities with the most implementations of this

crop, with 25% and 14% respectively.

The strong growth of the procurement of citrus fruit

insurance, since its appearance until today, is due to highly

varied factors that could be summarised into a gradual

improvement and adaptation of the insurance lines to the

farmers' specific needs and to the crops' particular

characteristics.

Thus, in 1985, a general loss occurred due to a frost in all

the citrus fruit areas which made it possible to gather enough

information to redistribute, in the 1990s, the zoning of the

rates for this risk by polygon on the survey map in the

provinces of Valencia, Castellón, Murcia and Sevilla. A review

was also carried out during these years on the citrus fruit

insurance rates and the following risks were included in the

insurance covers: persistent rain, torrential rain and flood. At

the end of this decade, the new Pixat insurance for Citrus

Fruit Producer Organisations was implemented.222222222

The leap into the following decade was accompanied by

significant changes. To begin with, farm insurance came into

being. From this moment on, the cover of damage to fruit

due to adverse weather conditions was handled by plot as

well as by farm. Adjustments were made to the cover periods.

Thus, the start of hail risk covers was made earlier, 20 April,

and the end of the cover periods for each of the crops and

varieties were adapted to their harvesting cycles. On the

other hand, an exceptional cover extension was established

in relation to hail for citrus farmers that had already procured

insurance the season before, as well as an annual cover

period for the death or total loss of trees caused by risks

covered in the production.

Also noteworthy during this decade were the reviews carried

out on the specific loss adjustment rules, due to the

modification of the assessment tables for quality damage

caused by frosts, hail and wind

49

Decades

80-8990-9900-09

Averageinsurablearea (ha)

231,981257,897290,314

Averageinsured

area (ha)

17,11680,852182,963

% Ofinsured/

insurable area

7.3831.3563.02

% Of increase in insured

area compared

witch previus period

372.37968.94

Average insured

production (mt)

345,0081,385,4772,603,088

% Of insured/insurable

production

9.0427.3543.08

% Of increaseinsured

productioncompared with

previousperiod

301.58654.50

Average insurable

production (mt)

3,818,0715,065,0716,042,380

00-09

0

50,000

90-9980-89

100,000

150,000

200,000

Increase in Insured Area (ha)

00-09

0

1,000,000

90-9980-89

2,000,000

3,000,000

Increase in Insured Production (mt)

EVOLUTION AND IMPLEMENTATION IN WINE GRAPES

A downward trend has been the main characteristic of the

evolution of area occupied by vineyards, especially from 1990

to today. Nonetheless, vineyards are placed third with regard

to area occupied by Spanish crops, behind cereals and olive

groves. With around 1.16 million hectares, we are the country

with the largest area of vineyards in the world. ss

With regard to distribution, it is worth noting that 51% of

the area occupied by vineyards is primarily located in Castilla-

La Mancha. Far behind are the Autonomous Communities

of Extremadura, Valencia and Castilla y León, which together

represent 21%.

50

00-09

0

100,000

90-9980-89

200,000

300,000

400,000

Increase in Insured area (ha)

00-09

0

500,000

90-9980-89

1,000,000

1,500,000

2,000,000

2,500,000

Increase in Insured Production (mt)

Although the greatest number of modifications made to

wine grape insurance have occurred during the last decade,

there are still some notable changes that took place during

the previous decades.

For example, as a result of Spain's entry into the EEC, from

the mid-1980s to the 1990s, the insurance prices had to be

raised in order to bring them in line with the Community

prices. The 1980s saw the inclusion of the risk of wilting

within the scope of production of the Bobal variety. And at

the end of the 1990s, the risks of persistent rain, torrential

rain and flood were included.

During the last decade, insurance plans have started providing

cover, with price differences, for quality damage caused by

hail for those areas and varieties that belong to quality

Designations of Origin. Likewise, and as a result of the strong

persistent rains that were recorded in the Communities of

Castilla-La Mancha, Andalucía, Extremadura and Madrid,

policies began to include cover for mildew risk. Lastly, the

new Farm Insurance was created, which covers any

uncontrollable adverse weather conditions on dry farming

plots, in other words, the same risks that are covered in

traditional combined insurance, plus drought risk.

At the end of this decade, a new cover was included for

vineyards belonging to certain Designations of Origin, which

were dedicated to producing high-value grapes. These

vineyards are called "Vineyards with specific characteristics"

in the insurance policy. The wildlife risk is also included in

the insurance covers.

Decades

80-8990-9900-09

Averageinsurablearea (ha)

1,562,0831,248,6751,131,027

Averageinsured

area (ha)

175,850294,768328,344

% Ofinsured/

insurable area

11.2623.6129.03

% Of increase in insured

area compared

witch previus period

67.6286.72

Average insured

production (mt)

988,6041,899,7312,202,341

% Of insured/insurable

production

18.4338.1234.94

% Of increaseinsured

productioncompared with

previousperiod

92.16122.77

Average insurable

production (mt)

5,364,8564,983,1946,303,928

51

Decades

80-8990-9900-09

Averageinsurablearea (ha)

311,928299,390352,432

Averageinsured

area (ha)

16,22940,67773,355

% Ofinsured/

insurable area

5.2013.5920.81

% Of increase in insured

area compared

witch previus period

150.65352.00

Average insured

production (mt)

1,757,4851,496,8983,160,841

% Of insured/insurable

production

27.5218.3524.29

% Of increaseinsured

productioncompared with

previousperiod

-14.8379.85

Average insurable

production (mt)

6,385,3828,157,89413,012,151

EVOLUTION AND IMPLEMENTATION IN VEGETABLES

00-09

0

20,000

90-9980-89

40,000

60,000

80,000

Increase in Insured area (ha)

00-09

0

1,000,000

90-9980-89

2,000,000

3,000,000

4,000,000

Increase in Insured Production (mt)

Over these last three decades, the vegetable sector has

evolved from a latifundium system (with large properties and

few owners) and atomized distribution to a concentration of

producers in large horticultural centres that depend on or

supply the large food chains. For example, in the year 2000,

vegetable production in tons was 28% higher than that of

the 1985 harvest and nevertheless, the amount of farmed

hectares dropped 18% between these two years.

On the other hand, Spain's entry into the EEC in the mid-

1980s helped strengthen our position as one of the world's

most solvent markets. Spain became the top fruit producer

in Europe and the second vegetable producer, after Italy.

As a result of the mechanisation of countless processes,

especially harvesting, the open field vegetables grown for

industry and those called early vegetables were at this time

the ones that prevented a drop in the production of this crop

and increased its relation with regard to the gross value of

the final agricultural production.

The evolution of insurance has gone hand in hand with the

sector's development. Since the 1980s to today, we have

progressed from insurance with vaguely-defined risks (wind,

rain, frosts in all areas and productions) to a stabilisation of

the risks in the second decade. In this third decade which is

now coming to a close, the risks are handled with increasing

specificity.

One of the more important phenomena that the vegetable

insurances have experienced is the change of the production

systems of certain crops. In the case of winter tomatoes, for

example, we have progressed from production that was 95%

open field farming during the 1980s to having that same

percentage represent greenhouse farming in the present day.

52

Decades

80-8990-9900-09

Averageinsurablearea (ha)

2,047,8192,141,1852,371,057

Averageinsured

area (ha)

19,31056,445143,463

% Ofinsured/

insurable area

0.942.646.05

% Of increase in insured

area compared

witch previus period

192.31642.95

Average insured

production (mt)

51,062118,966338,254

% Of insured/insurable

production

1.503.576.64

% Of increaseinsured

productioncompared with

previousperiod

132.98562.44

Average insurable

production (mt)

3,399,4493,333,3095,095,000

EVOLUTION AND IMPLEMENTATION IN OLIVE GROVES

00-09

0

50,000

90-9980-89

100,000

150,000

200,000

Increase in Insured area (ha)

00-09

0

100,000

90-9980-89

200,000

300,000

400,000

Increase in Insured Production (mt)

In this sector, Spain is the country that produces the most

olive oil and table olives in the world. This leading position

is related to the large area dedicated to olive groves (only

surpassed by cereal crops) primarily located in the

Autonomous Community of Andalucía and basically

dependent on the plant's weather-related demands.

As regards its production, the upward trend is due to greater

productivity, owing to the improved handling techniques as

well as to the impact of the implementation of irrigation in

an increasingly greater number of farms, amongst other

factors.

Unlike the rest of the previously-mentioned crops, its

implementation is low. The possible causes for this, up until

the creation of yield insurance for olive groves for the 2001

harvest, were primarily the low feeling of risk regarding the

covered risks and specifically hail, given its low incidence in

the main crop area due to the favourable weather conditions

there.

During this last decade, the improvements made to yield

insurance, and especially the review and improvement of

customised yield for insurance purposes, have increased the

implementation percentage.

53

YEAR ANIMALS

1980 0

1981 0

1982 832

1983 1,197

1984 12,265

1985 19,015

1986 19,958

1987 16,489

1988 12,716

1989 10,201

1990 24,151

1991 64,125

1992 102,463

1993 297,923

1994 588,215

1995 837,389

1996 879,908

1997 885,908

1998 881,214

1999 948,466

2000 1,513,176

2001 2,344,654

2002 3,243,352

2003 3,537,877

2004 9,321,213

2005 13,899,308

2006 9,818,178

2007 9,626,585

2008 8,937,086

2009 10,893,124

EVOLUTION OF THE NUMBERANIMALS INSURED (1)

Taking into account the figures shown in the table, we can

see the years during which the number of insured animals

notably rises. The first time we witnessed this phenomenon

was in 1983, although it was even more obvious in 1984.

This is due to the fact that it was during these years when

cattle insurance was created for fattening farms.

During this first decade, the number of insured animals

remained constant despite the creation in 1987 of insurance

to cover the African swine plague. The term of this insurance

was short since Spain was officially declared an area that was

free of this disease in 1989, a year during which, together

with the previous year, the number of insured animals slightly

dropped.

The current insurance for pig farms began with the 2008

Plan, covering the death or mandatory slaughter of animals

as a result of accidents, foot-and-mouth disease, classic swine

fever and Aujeszky's disease, in addition to compensation

for animal immobilisation.

Currently, all livestock sectors, especially the pig sector, are

dealing with a serious crisis due to the sharp increase in

production costs. As a result, livestock farmers are

reconsidering whether or not to procure insurance, which

has led to low implementation.

It is important to highlight the increase that occurred

between 1991 and 1995 as a result of the creation of two

insurances to cover sheep, select or not, and of a series of

improvements made to cattle insurance with regard to covers

and to animal values for insurance purposes.

During this last decade, the creation of insurances for cattle

breeding and rebreeding farms (1999 Plan), sheep farms

3.3 Insured animals

(1) The C&D lines and aquacultureare not included.

54

(2000 Plan), fighting-bull farms, fattening farms, BSE and

drought affecting grazing lands (2001 Plan) caused the

number of insured animals to triple.

Lastly, the increases in procurement of insurance that

occurred during 2004 and 2005 are primarily due to the

creation of insurance for meat-producing poultry farms and

to the weather conditions in 2005 (heavy drought), which

increased the feeling of risk, causing a 329% increase in the

number of insured animals, in comparison with the previous

year in the insurance line for drought affecting grazing lands.

Below is an analysis of the evolution of insurance

procurement over these 30 years for the most significant

livestock (cattle, sheep and goats) given that the covers for

the rest of the species (poultry, horses and pigs) are still being

developed, even though specific insurances do exist.

Cattle is of great importance in the livestock sector,

representing over 25% of final livestock production.

The extensive reorganisation that this sector has experienced

since the 1990s, due to reasons like the evolution of the

Common Agricultural Policy (CAP), has given rise to effects

such as the disappearance of numerous dairy farms, a greater

concentration and expansion of those that still exist and a

certain movement towards meat-producing animals.

With regard to distribution, the dairy cattle farms are primarily

located in the northern part of the Peninsula, in the

Autonomous Communities of Galicia, Castilla y León, Asturias

and Cantabria. As for the meat-producing farms, those

dedicated to fattening animals are mostly located in Aragón,

Cataluña and Castilla y León, while the suckler cattle farms

are distributed primarily throughout Andalucía, Extremadura

and Castilla y León.

Although insurance for the cattle sector has existed since the

System was founded, it wasn't until the end of the 1990s,

with the creation of insurance for breeding and rebreeding

farms, that a very positive response was recorded in the

sector. Its implementation during the four years following its

creation tripled. This insurance extensively changed the

previous one in two basic aspects: with regard to the covers,

including accidents and the main illnesses that concerned

livestock farmers, and with regard to processing, simplifying

the management of the commerc ia l network

EVOLUTION AND IMPLEMENTATION IN CATTLE

Decades

80-8990-9900-09

Average insurableanimals

5,018,7504,367,5726,177,293

Average insuredanimals

11,584262,240

1,222,749

% Of insured/insurableanimals

0.236.0019.79

% Of increase in insuredanimals compared with

previous period

2,163.8310,455.60

00-09

0

500,000

90-9980-89

1,000,000

1,500,000

Increase in Insured Animals

56

EVOLUTION AND IMPLEMENTATION IN SHEEP / GOATS

Decades

90-9900-09

Average insurableanimals

23,372,01925,921,401

Average insuredanimals

329,3941,695,639

% Of insured/insurableanimals

1.416.54

% Of increase in insuredanimals compared with

previous period

414.77

0

500,000

00-0990-99

1,000,000

1,500,000

2,000,000

Increase in Insured Animals

Of all the livestock productions, the sheep-goat sector

represents 8%, which is almost 3% of Spain's final

agricultural production.

There has been a downward trend in this sector during this

last decade, which is resulting in a restructuring and

reorganisation process due to both situational and structural

reasons (reduction in the censuses following the application

of the CAP reform).

The more noteworthy situational reasons are the outbreak

of blue tongue disease during 2007 in certain areas and the

increase in prices of raw materials for feeding animals which,

coinciding with a period of unusually low prices, has caused

a drop in the sale margins and thus in the farms, although

those which still exist tend to have a greater number of

animals.

By Autonomous Communities, the larger censuses are in

Castilla y León, Castilla-La Mancha, Andalucía and Aragón,

which all together represent around 80% of the total census

of goat and sheep species.

The year 1993 saw the start of this type of insurance in the

System and it was during the 2000 season, with the creation

of the Sheep and Goat Farm Insurance, that there was strong

growth in comparison with the previous decade. This

insurance introduced significant changes with regard to the

previous insurances, like the increase in animal values for

insurance purposes and the inclusion of covers, such as

compensation for l ivestock cul l ing (brucel losis).

57

3.4 Insurance for the collection anddisposal of dead farm animals(C&D)

The danger that the outbreak of Bovine Spongiform

Encephalopathy (BSE), better known as “mad cow disease”,

signified for public health, made it evident that there was a

need to create an effective system for the collection and

disposal of dead animals on Europe's livestock farms. In order

to prevent diseases from spreading amongst the animals and

avoid the possibility of a subsequent outbreak in humans,

the EU created specific regulations in 2002 that set forth the

steps that the farmers should take in order to destroy the

carcasses of their animals.

Since then, the fulfilment of these obligatory processes in

Spain has been carried out through the Agricultural Insurance

System. Through this System, farmers take out insurance

that covers the expenses incurred from the collection and

disposal of the dead animals on their farms. The process for

collecting and disposing of the carcasses is carried out by a

series of management entities authorised by the Autonomous

Communities, at prices that both parties negotiate in

advance.

From the insurer's point of view, the collection and disposal

of dead animals on the farm take the form of livestock

farmer assistance insurance, which is evident when one

analyses the different parameters that are included in the

process.

Furthermore, as an added value, this service guarantees that

the entire process (from the farmer's request to collect the

animals until their disposal) is carried out in accordance with

the legal procedures and that the animals are moved under

optimal conditions in order to minimise the impact on the

environment and the risks that this activity can impose on

public health. This service also eliminates inconveniences for

the Community.

YEARINSURED INSURABLE

ANIMALS/PLACES ANIMALS/PLACES

2001 508,306 155,000

2002 65,062,186 17,071,698

2003 89,173,446 49,542,140

2004 145,948,574 79,274,377

2005 200,821,329 169,052,392

2006 225,319,506 207,071,236

2007 233,158,746 222,539,820

2008 232,285,712 231,142,286

2009 266,039,343 249,838,617

EVOLUTION OF INSURED AND INSURABLEANIMALS UNDER C & D

Since its implementation in the 2001 Plan, its growth during

the following years has been due to the incorporation of

almost all the Autonomous Communities and the inclusion

of different species. As a result, implementation exceeded

93% in the year 2009.

The notable increase in insured animals/places that occurred

in 2005 is due to the entry into the insurance of various

Autonomous Communities like Andalucía, Aragón, Valencia

and Galicia, with a high number of livestock species, such as

sheep, goats, pigs, poultry and rabbits.

4Subsidies forinsurance prices

One of the three main characteristics of the Spanish

Agricultural Insurance System is the Public Administrations'

involvement in the cost of insurance. In other words, the

State makes a contribution, via direct subsidies, to agricultural

and livestock farmers in order to pay a substantial part of

the price which, as in any other branch of insurance activity,

must be paid by the insured party in return for the insurance

cover bought from the insurance company.

This State contribution, which is validated by the European

Union Authorities and is about 53% of the final cost of the

insurance, has been, and continues to be, a deciding factor

in guaranteeing the System's development.

As shall be seen later in this chapter, this development has

had two clearly distinct phases within the context of the

development of the State of the Autonomous Communities

as established in the Constitution of 1978. Initially the weight

of the subsidies was borne almost entirely by the General

Budget of the State. Nowadays it is alleviated and

complemented by the aid granted by the different

Autonomous Communities according to the weight and

importance that agricultural activity represents in each

Community, and to the budgetary limitations at any given

time.

This institutional support has been constant since 1980 and

is aimed at agricultural professionals (the agricultural

insurance subsidy is the only subsidy given automatically

once the respective insurance application form has been

presented). Furthermore, it has been perfected by another

means which strongly reflects the degree of collaboration

between the public and private sectors in this System: the

Subsidy Settlement Agreements which were signed between

ENESA and the various Departments of Agriculture in the 17

Autonomous Communities and AGROSEGURO on behalf of

the Pool. As a result, the agricultural or livestock professional

only pays the net price at the time of purchasing the

insurance, i.e. the final cost of the insurance less the State

and Regional subsidies applicable in each case.

4.1 ENESA - Spanish agriculturalinsurance entity

As already explained in chapter two, ENESA is an

Autonomous entity under the Ministry of the Environment

and Rural and Marine Affairs (MARM). Its main duties include

establishing the subsidy percentages to be applied to the

agricultural insurance premiums based on two main

parameters: the type of agricultural or livestock productions

that are to be insured, usually divided into six groups, and

the different characteristics of the agricultural or livestock

farmer carrying out the activity.

Therefore, starting with a “base subsidy” for each production

type, the subsidy will increase according to the characteristics

of the subsidy recipient (farmer whose main occupation is

farming, young farmer, insurance purchased in previous

years, etc).

60

YEAR MILL. €

1980 0.59

1981 10.31

1982 12.50

1983 18.68

1984 37.47

1985 31.42

1986 22.13

1987 28.12

1988 36.43

1989 53.79

1990 63.85

1991 77.11

1992 92.81

1993 90.47

1994 102.07

1995 93.92

1996 113.37

1997 105.95

1998 123.78

1999 111.26

2000 131.88

2001 139.31

2002 195.50

2003 209.05

2004 209.36

2005 278.17

2006 282.17

2007 303.43

2008 304.12

2009 286.69

TOTAL 3,565.71

61

OVERALL ENESA CONTRIBUTION

TO AGRICULTURAL INSURANCE

In short, it is a procedure which makes purchasing insurance

easier while respecting the Central Government's policy with

regard to agricultural insurance subsidies. It “relieves” the

insured party from paying the total price, leaving the

representative of the insurance companies, AGROSEGURO,

with the task of “claiming” from the government the subsidy

amount which pays the rest of the overall price of the

insurance that has been purchased.

At the same time, this payment procedure makes it possible

to check that all the information provided by the insured

party in the “insurance application form”, which is also the

subsidy application document, is correct and meets the

criteria set out in the corresponding annual Ministerial Order

concerning subsidies.

The first Agreement of this type signed between ENESA and

AGROSEGURO dates from November 1980. Since then, this

Agreement has been adapted as the management of the

Agricultural Insurance System itself has evolved.222222

As previously mentioned, the Autonomous Communities

join the System by contributing from their Budgets, thus

complementing the subsidy granted by the Central

Government and making it possible for them to support in a

more concrete manner those vegetable or livestock

productions that are most important for their particular

Autonomous Community.

Initially, the procedure that was followed involved subsidising

a percentage of the total cost of the insurance for the

Community's main productions.

Today, the procedure involves establishing a percentage of

the subsidy total set by ENESA, so that the two subsidies do

not exceed the limits set by European Community legislation.

62

4.2 Autonomous Communities

0

50

100

150

200

250

300

1980

1981

1982

1983

1984

1985

1986

1988

1989

1990

1987

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

350

EVOLUTION OF ENESA’S ANNUAL CONTRIBUTION TO AGRICULTURAL INSURANCE

2009

Value in millions of euros.

63

AUTONOMOUS COMMUNITIES

Government of ANDALUCÍA

Government of ARAGÓN

Principality of ASTURIAS

Government of the ISLAS BALEARES

Autonomous Community of the CANARIAS

Autonomous Community of CANTABRIA

Autonomous Community of CASTILLA-LA MANCHA

Autonomous Community of CASTILLA Y LEÓN

Generalitat of CATALUÑA

Generalitat of VALENCIANA

Autonomous Community of EXTREMADURA

Government of GALICIA

Autonomous Community of LA RIOJA

Autonomous Community of MADRID

Autonomous Community of MURCIA

Autonomous Community of NAVARRA

Refional Government of VIZCAYA

TOTAL CONTRIBUTION FROM THE COMMUNITIES

TOTAL MILL. €

100.39

154.21

16.39

5.02

57.05

0.38

82.26

146.66

106.63

252.50

85.09

50.74

28.49

11.11

49.30

60.92

2.37

1,209.50

Value in millons of euros.

Just as the Central Government has done, the different

Autonomous Communities have signed Partnership

Agreements with AGROSEGURO for these subsidies. These

are Agreements that generally follow the same criteria as

those of the Central Government. In this way, it is possible

to ensure that the recipients of the subsidies meet all the

requirements officially set.

The first Partnership Agreement between an Autonomous

Community and AGROSEGURO was signed in December

1987 with the Autonomous Community of Aragon. The last

one was signed in 2009 with the Community of Cantabria,

thus rounding off the agreements with all the Communities

which are part of this management and control procedure.

Similarly, and as was the case for the ENESA Agreement, all

of the Communities have been adapting to the evolution

and development exper ienced by the System.

FINANCIAL CONTRIBUTIONS MADE BY THE AUTONOMOUS COMMUNITIES

TO AGRICULTURAL INSURANCE DURING THE 1988-2009 PERIOD

64

4.3 The total subsidy forinsurance cost comparedwith premiums

Factor as important as the subsidising of the insurance price

in the development of agricultural insurance must be included

in the evolution of the System itself, as well as of other

parameters such as the incorporation into the European

Union, with its regulations concerning state aid, the evolution

of the agricultural structures over the past thirty years and

the budgetary limitations of both the Central and Regional

governments.

EVOLUTION OF THE ANNUAL CONTRIBUTION FROM THE AUTONOMOUS COMMUNITIES TO

AGRICULTURAL INSURANCE

0

20

40

60

80

100

120

1988

1989

1990

1991

1992

1993

1994

1996

1997

1998

1995

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

140

Value in millons of euros.

In any case, subsidies for insurance cost have continued to

be that factor of “agricultural management policy”

suggested by the first section of the Agricultural Insurance

Act of 1978.

65

An equally important factor has been the need to comply

with the regulations set by the European Union regarding

the extent of the subsidy that can be awarded, which can

reach 80% of the price of the insurance when covering

losses caused by natural disasters or adverse weather

phenomena that are considered natural disasters, or just

50% when covering risks that are not classified as potentially

catastrophic risks, combined with others that may cause

losses of this kind.

0

50

100

150

200

250

300

350

400

450

EVOLUTION OF THE ANNUAL CONTRIBUTION (ENESA + AUTONOMOUS COMMUNITIES)TO AGRICULTURE INSURANCE

1980

1981

1982

1983

1984

1985

1986

1988

1989

1990

1987

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Value in millons of euros.

66

YEAR

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

ENESA

0.59

10.31

12.50

18.68

37.47

31.42

22.13

28.12

36.43

53.79

63.85

77.11

92.81

90.47

102.07

93.92

113.37

105.95

123.78

111.26

131.88

139.31

195.50

209.05

209.36

278.17

282.17

303.43

304.12

286.69

AUTONOMOUSCOMMUNITIES

1.83

8.11

10.44

15.49

21.63

22.25

25.13

24.08

34.44

31.86

37.42

35.98

46.28

48.04

75.50

80.51

83.47

111.28

121.21

127.54

132.92

114.10

POLICY-HOLDER

0.82

10.29

10.69

17.66

33.07

37.61

36.04

40.78

50.23

50.54

55.98

66.66

77.73

71.40

86.72

90.10

121.03

127.03

176.89

157.12

172.96

168.12

195.33

213.99

231.79

272.88

260.67

299.28

305.55

315.47

TOTAL COST

1.41

20.60

23.19

36.33

70.54

69.03

58.17

68.90

88.49

112.44

130.27

159.26

192.16

184.12

213.91

208.11

268.84

264.83

338.09

304.36

351.12

355.48

466.32

503.56

524.62

662.34

664.05

730.25

742.59

716.26

Vaue in millons of euros.

FINANCIAL CONTRIBUTION MADE BY ENESA, THE AUTONOMOUS COMMUNITIES AND POLICY HOLDERS

IN RELATION TO THE TOTAL COST

The Spanish System has managed to combine all of these

regulations through its Combined Agricultural Insurance

System. At the same time, it has had to adjust to financial

and economic circumstances in order to establish the

0%

20%

40%

60%

80%

100%

1980

1981

1982

1983

1984

1985

1986

1988

1989

1990

1987

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

CONTRIBUTIONS FROM THE ADMINISTRATIONS TO THE COST OF AGRICULTURAL INSURANCE

2009

ENESA A.C. POLICY HOLDER

67

necessary totals for subsidising the price of the insurance in

each of the last thirty financial years.

5 Purchasing anddistribution

70

One of the most interesting, and quite possibly most

original characteristics of the Spanish Agricultural Insurance

System is that the insurance companies that belong to the

pool cannot deny insurance to any agricultural or livestock

farmer who wants to be insured by this System, as long as

the farmer meets the formal requirements stipulated, year to

year, in the Annual Plans and the Ministerial Orders that

complement them. These Plans and Orders set forth the

different requirements that must be fulfilled if one wants to

be entitled to receive a certain percentage of the subsidy.

Thus, it is a System in which the insurance company does

not previously select its clients, but rather the clients, in this

case the professional farmers, know when they purchase the

insurance that if they do not meet the “minimal technical

conditions” for farming or “handling” of the livestock that

are included in the policy's terms and conditions, coverage

of the loss could be denied when the damage is assessed by

the adjusters.

Under these circumstances, and given the type of insurance

selected by the legislator (co-insurance, which determines

the basic uniformity of the premium offered by the co-

insurance companies grouped in the pool), marketing is the

most important factor around which the activity of these

companies normally revolves, since their ability to attract

clients is what will reflect their business contribution to the

co-insurance pool. In turn, the volume of business contributed

is the most important criteria for determining their

participation in the co-insurance pool year after year and,

consequently, their share in the activity's final annual result.

This chapter will analyse the System's evolution from three

different viewpoints: the policies, premiums and sums

insured; the various types of policy holders; and the channels

of distribution for these insurances, an activity that requires

clear specialisation of the different brokers.

5.1 Purchasing agriculturalinsurance

Several indicators that demonstrate the importance and

evolution of agricultural insurance in Spain come from

economic data (accrued net premium, sum insured, etc.),

which is derived from the purchasing of policies by the

different subsectors, as well as from the economy's general

evolution, the weather conditions during the previous year

and, very important, by the ongoing improvements

introduced into the different covers offered by the System.

Below is a summary, presented step by step, of the most

relevant aspects of the System's evolution, which have made

it possible for the System to reach its current level of

development.

As already mentioned in Chapter 3, in 1980, the first year

of the System, three hail insurances were created in order

to cover grape, tobacco and apple productions. The 1981

Insurance Plan incorporated five new types of insurance.

These included the combined winter cereal insurance, for

which over 225,000 insured parties took out policies during

its first year.

In 1982 twelve agricultural insurances and one livestock

insurance were integrated into the System. The primary new

71

development during this time was that the experimental

insurance for winter cereals became “integrated”(1).

Premiums rose 10.9%, which was notable growth despite

the harvest reductions, especially that of cereals due to the

drought.

YEAR AGRICULTURE LIVESTOCK AQUACULTURE C & D TOTAL

1980 1.15 1.15

1981 16.64 16.64

1982 18.43 0.03 18.45

1983 28.55 0.03 28.58

1984 53.99 0.43 54.42

1985 52.48 0.73 53.21

1986 47.09 0.87 47.96

1987 55.05 0.80 55.85

1988 70.34 0.53 70.87

1989 87.46 0.33 87.80

1990 102.10 0.91 103.01

1991 122.41 2.24 124.66

1992 144.33 3.55 147.88

1993 134.81 5.88 140.69

1994 151.19 9.94 161.13

1995 141.67 15.44 157.11

1996 188.54 17.95 206.49

1997 183.76 19.62 0.03 203.41

1998 205.17 23.27 0.05 228.48

1999 212.66 23.00 0.18 235.84

2000 247.48 32.94 0.52 280.94

2001 231.52 40.36 0.81 0.73 273.42

2002 254.71 54.86 1.78 45.99 357.33

2003 283.67 56.51 2.44 65.55 408.16

2004 298.47 60.98 2.35 76.82 438.63

2005 326.18 67.79 2.56 103.09 499.62

2006 367.66 83.42 2.20 141.15 594.43

2007 373.89 72.09 1.77 150.50 598.24

2008 448.32 73.82 2.22 154.02 678.37

2009 413.67 76.36 2.69 157.25 649.98

Value in millons of euros.

EVOLUTION OF THE VALUE OF ACCRUED NET PREMIUM BY SUBSECTOR

(1). This means it covers all kinds of adverse weather conditions. The yield is fixed by areas, crops and varieties, as well as the premia. It covers the difference

between the total guaranteed harvest of the entire exploitation and the actual harvest obtained (the assessment is done by means of compensation between

plots)

72

Amongst the main new developments in 1983, the expansion

of the integrated winter cereal insurance to cover the entire

country and the inclusion of frost and hail insurance for the

pear and cherry productions are particularly noteworthy.

With regard to the livestock sector, the covers for cattle were

expanded and insurance for the pig sector was incorporated,

which covered African swine plague. Premiums recorded an

overall growth of 55% with growth of over 100% for most

of the agricultural crops, except in livestock, for which the

purchasing of insurance remained low.

In 1984, still more new productions and insurance covers

were incorporated, like the expansion of vegetable insurance

to include ten new crop species and the specific plum, table

grape and protected crop insurances. As in the previous year,

there was a significant increase in the purchasing of insurance

(90%), with the increases in the integrated winter cereal

(10,027%, in comparison with the accumulated figure from

the 1980-1993 period) and cherry (298%) insurances being

worthy of mention.

The agricultural sector's situation in 1985 was characterised

by a drop in the wheat, horticultural, grape and olive

productions. On the other hand, the good harvest of fruits,

including citrus fruits, with an increase of over 20% in

comparison with the previous year, was of special note. The

purchasing of insurance during this year dropped slightly by

about 2% in comparison with 1984, while winter cereal

insurance recorded its worst performance with a reduction

of around 57%.

Value in millons of euros.

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

500

450

400

350

300

250

200

150

100

50

0

EVOLUTION OF THE VALUE OF ACCRUED NET PREMIUM BY SUBSECTOR

AGRICULTURE AQUACULTURELIVESTOCK C & D

73

With regard to 1986, it is worth noting that even with a

cultivated cereal area similar to that of the previous season,

there was a drop in production of around 28% primarily due

to the adverse weather conditions. In general, almost all the

agricultural products experienced large reductions. And

logically, a 10% drop was recorded in the premiums paid for

purchased insurance.

Agricultural income during 1987 rose 17.1%, primarily due

to the favourable weather conditions and Spain's entry into

the EEC. Agricultural productions were noteworthy during

this year as a result of the increase in the area and

productions of crops like cereals, pear, apple, olives, citrus

fruits and wine grapes, with final agricultural production

experiencing a 7.2% growth. As a reflection of this situation,

premiums rose 17% overall and especially with regard to

integrated winter cereal insurance, which increased by 95%

in comparison with 1986.

The economic results of 1988 show a clearly positive balance

for Spanish agriculture. Cereal production reached its highest

level to date with more than 23 million tons, citrus fruit

production rose 4.7% and industrial crops recorded increases

of over 17%. On a negative note, there was a high reduction

in the wine grape harvest due to a strong presence of mildew.

This situation signified a notable increase in the volume of

premiums, around 27% compared to the previous year,

although the variation was quite different amongst the

various insurance lines. Of special note were the increases

related to cotton (516.85%), apricot (109.7%) and winter

cereals (59.9%).

The results from 1989 in the agricultural sector can be

classified as negative in comparison with other sectors, due

to the drop in final agricultural production (5.5%) as a result

of the unbalanced weather patterns that caused a drought

at the start of the season and excessive rain at the end. The

farming subsector dropped by 7.8% and final livestock

production, by 2.3%.

The premiums paid to the System continued their upward

trend, with insurance line increases of 178% in the case of

the wine grape. Nevertheless, this year saw a 26% increase

in loss compared with the previous year, which was primarily

caused by the drought that adversely affected the cereal

harvest.

The year 1991 was characterised by a 1.48% drop in final

agricultural production, although a 3.5% increase was

recorded for agricultural income per person in real terms.

This was due to the good results obtained with cereals and

olive oil and to the larger subsidies from the EEC.

During this year, the growth that had started two years prior

was further supported with an over 21% increase in

premiums. Although the most important growth in absolute

figures was recorded in the insurance lines related to cereals,

wine grapes, peach and sweet orange, we must highlight

the increases in the insurances for fattening cattle and

breeding and rebreeding cattle by 473% and 274%,

respectively, in comparison with the previous year.

The overall result of the agri-food sector in 1993 was very

positive due to the effects of the Common Agricultural Policy

Reform, with agricultural income experiencing a 21%

increase. Nevertheless, the production situation barely

improved, with final agricultural production increasing only

2.3% from 1992.

74

Unlike the rest of the years, 1993 saw a reduction in

premiums of around 5% in comparison with 1992, which

was primarily a result of the sharp drop in cereal prices and

less pronounced drops in wine grapes and citrus fruits, with

fruit trees remaining the same.

The livestock sector saw an upward trend in cattle insurances

with increases of over 13% both with regard to policies and

insured animals, as well as the creation of insurance for

sheep.

The economic results of agricultural activity in 1995 were

affected by various factors, amongst which abnormal weather

patterns were particularly noteworthy. The consequences

included a sharp drop in the yields for dry farming and even

for irrigated farming, the areas of which were around

150,000 hectares less due to the harsh drought and scarcity

of water reserves. Likewise, the spring frosts caused high

losses for the vineyards and olive groves, as well as for the

cereal and pulse crops.

This situation, together with the adjustments made to cereal

prices and the maximum insurable yields in certain production

areas, caused a slight drop in the premiums (3%) paid during

this year and was cushioned by the better performance of

the cattle lines.

Unlike 1995, the economic results of agricultural activity in

1996 were positively affected by the good weather conditions

recorded this year, during which the rains supported strong

agricultural production growth.

This situation signified an increase of over 31% in premiums

compared with the year 1995. The integrated insurance for

cereal lines, combined grape and combined cereal lines

showed the best performance with increases of 64%, 38%

and 75%, respectively, in the sum insured in relation to the

previous year. The growth of the wine grape (22.5%),

tangerine (27.6%) and breeding and rebreeding cattle

(12.3%) lines offset the results of the System as a whole.

This year saw the best loss rate recorded during the thirty

years analysed.

For the year 1997, we must highlight the creation of the

cover for aquaculture risks by means of a specific insurance

line for turbot, sea bass and sea bream.

During the year 1998, final agricultural production in the

agri-food sector rose around 3.2% in comparison with the

previous year. The increase in agricultural production was

recorded at 3.7% while livestock production rose 2.5%.

75

Value in millons of euros.

YEAR AGRICULTURE LIVESTOCK AQUACULTURE C & D TOTAL

1980 22.17 22.17

1981 868.78 868.78

1982 858.30 3.26 861.56

1983 1,312.34 2.36 1,314.70

1984 1,854.10 16.91 1,871.02

1985 1,849.27 28.92 1,878.20

1986 1,730.00 33.32 1,763.32

1987 1,881.52 27.10 1,908.62

1988 2,312.86 24.54 2,337.41

1989 2,438.12 12.50 2,450.62

1990 2,469.47 23.13 2,492.60

1991 2,730.76 44.65 2,775.41

1992 2,639.55 80.57 2,720.13

1993 2,417.10 123.40 2,540.50

1994 2,702.04 205.93 2,907.97

1995 2,413.73 308.25 2,721.98

1996 3,630.48 328.72 3,959.21

1997 3,535.83 358.89 2.48 3,897.20

1998 4,612.62 421.09 0.83 5,034.55

1999 4,647.24 422.03 10.62 5,079.88

2000 5,217.91 555.21 10.31 5,783.43

2001 4,785.56 1,340.29 38.78 39.73 6,204.35

2002 4,973.60 1,670.59 67.01 1,334.93 8,046.13

2003 5,333.37 1,600.33 57.84 1,408.88 8,400.42

2004 5,513.29 1,801.18 56.63 1,600.98 8,972.09

2005 5,727.31 2,034.77 48.26 1,860.40 9,670.73

2006 5,640.34 1,778.33 43.60 1,814.12 9,276.38

2007 6,669.22 1,712.23 56.52 1,908.74 10,346.71

2008 7,485.19 1,730.50 62.90 1,875.55 11,154.14

2009 7,073.49 1,750.46 67.03 1,848.33 10,739.31

EVOLUTION OF THE SUM INSURED BY SUBSECTOR

76

This positive evolution was also reflected in the accrued

premiums (12% more than in the previous year). This was

the result of various factors, such as the increase in crop

prices, especially those of high value for insurance purposes,

like fruit trees and grapes, and the incorporation of new

types and covers of insurance that have been well-received

by the sector. The incorporation of flood cover for all the

insurance lines offered by the System also merits mention.

The year 2000 was characterised by an increase in final

agricultural production of 3.3% in comparison with 1999 as

a result of certain favourable weather conditions that made

a significant increase possible in the agricultural productions,

especially those of herbaceous crops, vineyards and olive

groves.

This year recorded an increase in premiums of over 19%,

with the best-performing line groups during the year being

cattle, fruit trees and herbaceous crops, which varied in

comparison with 1999 by 134%, 111% and 120%,

respectively.

Moreover, the current insurance lines improved, like the cover

for damage caused by persistent rain in cherries (spots or

blemishes), and new insurance lines were incorporated, like

those related to olive and beetroot yields and farm insurance

with a yield cover for extensive herbaceous crops.

As regards the livestock sector, the appearance of bovine

spongiform encephalopathy (BSE) was notable, as it

significantly changed the general conditions of livestock

activity.

During 2001, the most significant event was the ruin of the

winter cereal harvest that caused a drop from 19.8 million

tons to 12.5 million. On the other hand, final livestock

production rose 4.5%.

Of special note during this year was the incorporation of the

insurance line to cover damage caused by drought in grazing

lands used to feed cattle, as well as the insurance line to

cover the expenses incurred from the collection and disposal

of dead cattle on the farm, which at the end of the day has

become the System's most important line due to the volume

of premiums it brings in.

0

2,000

4,000

6,000

8,000

10,000

12,000

1980

1981

1982

1983

1984

1985

1986

1988

1989

1990

1987

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

EVOLUTION OF THE SUM INSURED

2009

Value in millons of euros.

77

In 2003, plant production was characterised by slight

increases in the productions of fresh fruit, citrus fruit and

grapes, which were not able to offset the sharp drop in the

production of olives and the group overall. The value of

livestock farming rose 5.2% thanks to the slight increase in

prices. The overall purchasing of insurance rose. The positive

YEAR AGRICULTURE LIVESTOCK AQUACULTURE C & D TOTAL

1980 2,204 2,204

1981 281,209 281,209

1982 242,607 39 242,646

1983 286,250 55 286,305

1984 394,037 569 394,606

1985 351,646 882 352,528

1986 272,597 925 273,522

1987 225,836 751 226,587

1988 236,765 481 237,246

1989 263,793 473 264,266

1990 278,704 700 279,404

1991 315,422 1,628 317,050

1992 302,842 1,934 304,776

1993 312,183 3,678 315,861

1994 307,103 5,022 312,125

1995 292,680 7,527 300,207

1996 344,816 6,647 351,463

1997 320,138 7,435 3 327,576

1998 327,643 6,883 2 334,528

1999 325,932 8,994 7 334,933

2000 355,087 12,041 19 367,147

2001 301,986 21,545 31 1,847 325,409

2002 300,127 28,173 34 111,371 439,705

2003 295,194 29,242 31 128,270 452,737

2004 294,800 32,000 35 147,203 474,038

2005 291,480 48,355 25 177,550 517,410

2006 276,757 34,426 14 167,211 478,408

2007 303,463 29,447 12 183,757 516,679

2008 289,958 26,933 7 189,720 506,618

2009 261,804 28,690 7 192,479 482,980

EVOLUTION OF THE NUMBER OF POLICIES BY SUBSECTOR

acceptance of new insurances for the collection and disposal

of dead animals on the farm (C & D) and the yield and fruit

farm insurances, which were 145% higher than in the

previous year, were of particular note.

78

Amongst the improvements introduced into the System, the

expansion of covers to include almost all adverse weather

conditions in citrus fruit productions and the creation of

potato income insurance are worthy of mention.

The year 2004 saw agricultural income at current prices rise

3.7% in comparison with 2003: the sectors that showed the

most positive evolution were the cereal, olive oil and pig

sectors.

With regard to the purchasing of insurance, an increase in

premiums of over 7% in comparison with 2003 was

recorded. Also of special note, just as in the previous year,

were the contribution of the C&D insurances that were

gradually introduced in the various Autonomous

Communities for the different animal species, and the yield

and fruit farm insurances, to which the herbaceous insurance

lines must be added, with increases of more than 9% in

purchased policies.

For the first time, an insurance line was incorporated for the

forest sector, which was aimed at agricultural plots converted

into forestland. Worthy of mention within the livestock sector

were the creation of poultry farm insurance, which was

placed at the disposal of poultry farmers and especially

covered "heat waves", and the expansion of the cover of

death caused by “any reason” in fattening cattle insurance.

The effect of the frosts and drought during 2005 (the worst

year of the decade weather-wise and the one with the worst

“claims to net premium” ratio) in addition to the rise in fuel

prices caused agricultural income to drop by 10.3% in

constant terms. This year saw reduced plant production as a

result of the bad weather conditions (drop of 12% in citrus

fruits and 36% in herbaceous crops). Nevertheless, the

System as a whole grew, primarily owing to the premiums

paid through the C&D and fruit sector insurances.

79

During 2008, the value of the branch of agricultural activity,

at basic prices, rose 2.5% due to the increases in plant

production and animal production (2.5% and 2.4%,

respectively).

The overall purchasing of insurance during this year was

characterised by the recovery demonstrated by citrus fruit

insurance with a 15% increase, placing it at the levels of

previous seasons. On the other hand, an increase in cereal

prices of around 62% and a 15% increase in insured

production gave rise to growth of over 70% in the integrated

and yield insurances.

Improved insurance conditions predominated in 2008,

including: the creation of new types of insurance for the

citrus sector; inclusion of the cover for lack of fruit setting in

the cherry crops in Caceres; new types of insurance for the

wood production lines, in which seedlings are included as

insurable products; the creation of a new insurance for cut

flower productions; the incorporation of foot-and-mouth

disease cover in cattle insurances that still did not have it;

and the creation of pig insurance which covers accidents and

Aujeszky's disease.

Lastly, in 2009, plant production value dropped 11.9% as a

result of both the prices and production volume. In turn, the

value of animal production dropped 9.4%. As a whole, the

System received 4% less in premiums, which reflected the

serious economic crisis that affected the country, especially

cereals (with around 20% less purchasing of insurance),

citrus fruits and wine grapes. This situation was offset by the

positive purchasing levels for fruit trees, olive groves and

especially the line covering drought that affect grazing lands,

which rose 102% in comparison with the previous year.

79

80

5.2 Purchasing of insurance bytype of holder

The figure of policy holder is a typical, key element in the

insurance sector, given that the Insurance Contract Act of

1980 sets forth that if the insurance policy holder and insured

party are different individuals, the obligations and duties

stemming from the contract shall be the responsibility of the

policy holder (Section 7) unless these obligations and duties,

due to their nature, must be fulfilled by the insured party.

Nevertheless, the rights stemming from the contract shall

belong to the insured party or, as the case may be, to the

beneficiary this party has designated.

Since the beginning of the Spanish Agricultural Insurance

System, the figure of policy holder has had special relevance,

which is derived from the role reserved by the legislator in

Act 87/78 for all those organisations that already exist in the

agricultural sector (agricultural chambers, cooperatives, trade

unions, etc.) and which have been playing a central role

within that sector, as the Act itself points out in Section 2.

With a view to fulfilling this objective of promoting the

agricultural association network through “…greater

participation of the farmers by means of their own

professional and trade associations and organisations…”

(Section 2.5), the Administration has given priority, since the

System first began operating, to collective purchasing over

individual purchasing. It has done this by assigning higher

subsidies to collective contracts than individual ones.

("Collective" meaning those that are carried out through the

cooperatives, agricultural organisations or any other type of

civil association that brings together a group of agricultural

or livestock farmers).

As a result of this governmental policy, today collective

purchasing represents almost 100% of the total purchasing

of agricultural insurance subsidised by the Administrations.

Due to the Administration's interest in promoting this manner

of obtaining insurance, the Ministry for Agriculture, Fisheries

and Food issued in 1998 the Ministerial Order of 23 October

(Official State Gazette (BOE) of 28 October) that “creates the

Policy Holder Register for the collective purchasing of

combined agricultural insurances”. With the publication of

5.2.1 The figure of the agriculturalinsurance policy holder

81

this Order, since the 1999 Plan the collective groups in

question must be registered as policy holders in the

abovementioned Policy Holder Register in order to be eligible

to receive the subsidy by “collective” purchasing. Thus, and

as a basic requirement, the Statutes of the association,

organisation, group, etc. must stipulate that this body has

the power to purchase insurance on behalf of its members.

The evolution of the figure of policy holder has logically

followed Spain's social and economic evolution over the last

thirty years. Thus, the predominant role of policy holder

during the first decade was reserved for the Cooperatives,

rural banks and Agricultural Chambers.

If the first two have continued affirming and strengthening

their roles, the gradual loss of importance of the Agricultural

Chambers as insurance policy holders is the result of their

reduced functions of representation, presenting claims and

defence of the professional and socioeconomic interests of

the agricultural and livestock farmers. This role has been

assumed with unquestionable force by the freely-created

professional organisations.

The activity of the Agricultural Professional Organisations has

a two-fold purpose: on the one hand, as policy holders in

the name and on behalf of the agricultural and livestock

farmers of the collective policies, thus representing the rights

and obligations set forth in the Insurance Contract Act; and

on the other, as full members in the committees and work

groups in which the different types and covers of the

agricultural insurances are discussed and created.

Lastly, we must mention the consulting and advising services

provided by the Associations driven and fuelled by the

insurance companies themselves under the regulations issued

by the Ministry of Agriculture during the most important

years of the System's development.

5.2.2 Purchasing insurance according tothe legal status of the collectivepolicy holder

82

YEARAGRICULTURALASSOCIATIONSOF INSURANCE

ENTITIES

AGRICULTURALORGANISATIONSAND FARMERS

UNIONS

OTHERAGRICULTURALASSOCIATIONS

COOPERATIVES RURALBANKS

AGRICULTURALPROCCESSINGCOMPANIES(SAT) AND

OTHER LEGALENTITIES

LOCAL ANDPROVINCIAL

AGRICULTURALCHAMBERS

1980 169 318 75 431 412 37 431

1981 21,766 41,113 9,674 55,623 53,205 4,837 55,622

1982 18,999 35,887 8,444 48,553 46,442 4,222 48,555

1983 22,675 42,831 10,078 57,948 55,429 5,039 57,948

1984 31,608 59,704 14,048 80,776 77,264 7,024 80,775

1985 28,555 53,937 12,691 72,973 69,801 6,346 72,972

1986 22,401 42,314 9,956 57,248 54,759 4,978 57,249

1987 18,761 35,438 8,338 47,946 45,861 4,169 47,947

1988 19,857 37,509 8,826 50,747 48,541 4,413 50,746

1989 17,982 56,484 7,578 52,731 51,334 5,920 55,127

1990 27,676 53,940 9,954 62,204 58,683 5,981 49,032

1991 36,461 61,549 10,452 74,148 72,896 4,985 46,752

1992 37,131 56,667 10,782 74,961 77,517 4,316 36,446

1993 40,411 59,054 11,988 72,135 98,019 3,259 26,052

1994 83,214 56,331 15,201 74,461 59,086 4,483 15,386

1995 84,338 58,166 11,139 73,199 56,505 4,229 10,150

1996 109,990 66,986 13,369 77,524 71,974 4,136 3,681

1997 107,116 59,174 11,409 76,812 64,968 5,499 2

1998 117,969 57,695 12,138 69,244 70,858 4,336

1999 119,590 56,218 15,442 71,510 65,647 5,333

2000 137,611 58,070 17,564 75,371 71,772 5,805

2001 118,479 50,539 16,377 72,795 60,773 5,753

2002 191,323 58,389 28,174 77,831 75,451 7,617

2003 202,432 59,398 25,825 78,738 77,851 7,773

2004 214,428 60,880 26,878 80,572 82,353 8,295

2005 238,362 64,082 31,199 83,616 91,776 7,810

2006 226,081 57,920 28,837 72,597 85,988 6,618

2007 248,128 64,282 34,451 68,650 94,579 6,287

2008 249,437 77,549 33,920 44,947 96,178 4,5022009 241,339 75,961 29,611 39,701 91,530 4,790 0

EVOLUTION OF THE NUMBER OF POLICIES BY TYPE OF COLLECTIVE POLICY HOLDER

83

Value in millons of euros.

1980 0.10 0.20 0.05 0.26 0.25 0.02 0.26

1981 1.50 2.83 0.67 3.83 3.66 0.33 3.83

1982 1.66 3.14 0.74 4.24 4.06 0.37 4.24

1983 2.57 4.86 1.14 6.57 6.29 0.57 6.57

1984 4.90 9.25 2.18 12.52 11.97 1.09 12.52

1985 4.79 9.05 2.13 12.24 11.71 1.06 12.24

1986 4.32 8.15 1.92 11.03 10.55 0.96 11.03

1987 5.03 9.50 2.23 12.85 12.29 1.12 12.85

1988 6.38 12.05 2.84 16.30 15.59 1.42 16.30

1989 6.39 20.06 2.69 18.73 18.24 2.10 19.58

1990 10.66 20.77 3.83 23.96 22.60 2.30 18.88

1991 14.79 24.97 4.24 30.08 29.58 2.02 18.97

1992 18.44 28.14 5.35 37.22 38.49 2.14 18.10

1993 18.29 26.72 5.42 32.64 44.35 1.47 11.79

1994 43.51 29.45 7.95 38.93 30.89 2.34 8.05

1995 44.51 30.69 5.88 38.63 29.82 2.23 5.36

1996 65.33 39.79 7.94 46.05 42.75 2.46 2.19

1997 67.04 37.04 7.14 48.08 40.66 3.44

1998 81.13 39.68 8.35 47.62 48.73 2.98

1999 84.51 39.73 10.91 50.53 46.39 3.77

2000 105.57 44.55 13.47 57.82 55.06 4.45

2001 99.76 42.55 13.79 61.29 51.17 4.84

2002 155.81 47.55 22.94 63.38 61.45 6.20

2003 182.79 53.64 23.32 71.10 70.30 7.02

2004 198.67 56.41 24.90 74.65 76.30 7.69

2005 230.42 61.95 30.16 80.83 88.72 7.55

2006 281.13 72.02 35.86 90.27 106.92 8.23

2007 287.46 74.47 39.91 79.53 109.57 7.28

2008 334.06 103.86 45.43 60.20 128.81 6.03

2009 325.12 102.14 39.82 53.38 123.07 6.44

YEAR

AGRICULTURALASSOCIATIONSOF INSURANCE

ENTITIES

AGRICULTURALORGANISATIONSAND FARMERS

UNIONS

OTHERAGRICULTURALASSOCIATIONS

COOPERATIVES RURALBANKS

AGRICULTURALPROCCESSINGCOMPANIES(SAT) AND

OTHER LEGALENTITIES

LOCAL ANDPROVINCIAL

AGRICULTURALCHAMBERS

EVOLUTION OF ACCRUED NET PREMIUM VALUE BY TYPE OF COLLECTIVE POLICY HOLDER

5.3 Distribution ofagricultural insurance

84

As already mentioned in the introduction to this Chapter,

marketing this type of insurance requires significant

specialisation, given the nature of the goods to protect and

the multiple cover options that the System has been

developing, even for one single type of crop.

All this means that it is necessary to have an extensive

network of brokers, due to the large number of potential

insured parties, their geographic dispersion, often in places

that are difficult to access, and the inevitable specialised

documentation to be used, as well as adequate business

organisation that makes it possible to provide the service

throughout the entire country.

The extensive presence of co-insurance companies in the

pool to date has made it possible to meet the aforementioned

requirements, as seen in the graphs below.

85

Distribution of brokers by Autonomous Community. Purchasing of Insurance. Year 2009

AUTONOMOUS COMMUNITY NET COST (€) NO. OF POLICIES NO. OF BROKERS

Andalucía 37,870,317 19,367 446

Aragón 31,971,506 9,835 214

Asturias 1,157,399 1,039 60

Baleares 23,447 11 8

Canarias 613,483 867 12

Cantabria 546,823 172 31

Castilla y León 13,173,729 6,405 217

Castilla-La Mancha 12,891,877 5,494 224

Cataluña 32,747,188 15,521 568

C. Valenciana 23,159,139 17,522 199

Extremadura 9,345,868 2,466 97

Galicia 6,269,701 6,772 240

La Rioja 2,036,441 274 36

Madrid 1,805,589 807 65

Murcia 3,156,532 676 58

Navarra 12,092,397 6,873 127

País Vasco 764,083 644 32

TOTAL 189,625,520 94,745 2,634

Distribution of agents by Autonomous Community. Purchasing of Insurance. Year 2009

AUTONOMOUS COMMUNITY NET COST (€) NO. OF POLICIES NO. OF BROKERS

Andalucía 60,429,873 52,742 3,829

Aragón 50,266,725 30,281 922

Asturias 9,679,171 21,739 722

Baleares 2,660,286 1,735 52

Canarias 13,060,810 3,521 108

Cantabria 4,114,316 1,709 92

Castilla y León 75,376,179 71,432 2,049

Castilla-La Mancha 57,660,528 41,908 1,964

Cataluña 39,613,589 19,422 1,258

C. Valenciana 60,475,652 37,368 1,146

Extremadura 47,594,392 25,296 1,158

Galicia 23,685,468 58,191 1,819

La Rioja 13,018,449 3,329 236

Madrid 2,014,320 2,203 294

Murcia 40,611,026 8,767 413

Navarra 14,747,557 6,641 399

País Vasco 3,945,339 1,849 110

TOTAL 518,953,680 388,133 16,571

6Assessment of damagesand loss

88

If there is any time during which the usefulness of insurance

as an instrument for covering damage (normally financial)

caused by an unforeseen event is most evident, it would be

during the damage assessment. This is when the insured

party, who has paid a price in advance to the insurance

company in order to obtain a certain amount of cover,

“contacts” the person who has sold them this protection.

This contact is also often carried out by means of an expert

appraiser.

In the case of agricultural insurance, that figure has been

evolving not only technically, but especially structurally and

professionally. The involvement of the expert appraiser in the

System as a whole has been increasing together with the

sophistication of daily management resulting from its own

development.

Thus, this role has progressed from a government expert,

who belongs to various government agencies inherited from

the original System in which agricultural insurance was

individually managed by the insurance companies, to an

independent professional whose relationship with

AGROSEGURO, the System's manager, is defined by an

annual service agreement.

Likewise, the structure of this service has evolved just as

AGROSEGURO has evolved, adapting its geographic

structure. In 1985 there were 11 branches, the first large

step in the activity's management. In 1986 there were 13,

and in 2000, without going up in number, they were

redistributed to form the system that is still in place today.

The Regional Directors coordinate the work of these

professionals in each geographic area. The experts can be

called to areas different from the one in which they usually

work when circumstances so require. That coverage is what

makes it possible to provide quick service to the insured

parties precisely where it is needed, based on the gravity of

the situation caused by the loss.

Over the years, the number of professionals that participate

in the expert network has risen from 87 in 1980 to 467 in

the present day.

MAP OF REGIONAL MANAGEMENT AUTHORITIES

89

6.1 Evolution of the expertnetwork

As mentioned at the beginning of this chapter, during the

System's first years, the expert network was basically

comprised of experts who dedicated themselves to this work

part-time, many of which were government officials who

worked for the different administrations. Their spheres of

activity were limited to the Province and thus, each Province

had to be provided with a sufficient number of experts that

would make it possible to effectively handle the possible

losses.

As the System evolved, the experts became independent

professionals who were dedicated to their activity full-time.

As a result, they were able to easily move around, travelling

to other geographic areas where their services were required.

The aim was thus to achieve higher appraisal quality and

specialisation. Indeed, the new situation made it possible for

each expert to work more days, which resulted in more

experience and a greater ability on the part of the System to

respond to the losses, as it had more experts who were

capable of appraising any type of crop, or animal in the case

of livestock productions.

As a result of the above, and despite the increase in the

insurance lines and covered risks, the number of experts has

remained about the same in recent years, even slightly

dropping.

YEARAGRICULTURAL LIVESTOCK

TOTALEXPERTS EXPERTS

1980 87 87

1981 145 145

1982 200 24 224

1983 269 32 301

1984 408 49 457

1985 512 61 573

1986 486 58 544

1987 523 63 586

1988 533 64 597

1989 543 65 608

1990 530 64 594

1991 567 68 635

1992 475 57 532

1993 496 60 556

1994 515 87 602

1995 467 91 558

1996 432 110 542

1997 422 123 545

1998 422 124 546

1999 415 118 533

2000 381 143 524

2001 383 152 535

2002 370 133 503

2003 370 136 506

2004 356 133 489

2005 376 126 502

2006 344 121 465

2007 317 118 435

2008 339 123 462

2009 345 122 467

90

Evolución del número de profesionales que forman la red pericial.

0

100

200

300

400

500

600

1980

1981

1982

1983

1984

1985

1986

1988

1989

1990

1987

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

700

EVOLUTION OF THE EXPERT NETWORK19

80

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

600

500

400

300

200

100

0

EVOLUTION OF THE EXPERT NETWORK BY SECTOR

Agricultural experts Livestock experts

91

The assessment of damage caused to agricultural production

by weather-related events or to livestock production by

diseases, including epidemic diseases, acquires special

significance for agricultural insurances, as it consists of

assessing damage caused to beings which, except in cases

of instant death, can continue evolving.

It is not just a matter of knowledge, which experts

(agronomists or veterinarians) who normally fulfil this role

logically possess, but rather guaranteeing, especially in a

System in which the public administrations play such a large

role, that the assessment is performed in accordance with

rules that are pre-established and known by the insured

party, thus ensuring the legal certainty of all those involved

(insured party, insurance company and appraisal expert).

This very important moment in the life of the insurance policy

is also covered in the Agricultural Insurance Regulation of

1979, Sections 26 to 29. It is here, amongst other legal

provisions (Sec. 28), where the concept of “contradictory

assessment” is covered, as is the “third-party expert”, the

individual in charge of settling any possible discrepancies

that arise between the experts representing the two parties

in conflict (insured party and insurance company).

However, Section 26 already provided for the existence of

“Assessment Rules”, jointly drawn up by the Ministry of the

Treasury (Supervisory Authority for Insurance and Pension

Funds), Ministry of Agriculture (ENESA) and the agricultural

organisations and insurance Companies (AGROSEGURO). In

other words, the public-private partnership appears again,

influencing the System's operation.

These "Assessment Rules” are included in the insurance

policy since they cover aspects as important as the method

for determining the damage to be compensated. They also

set forth the manner in which the appraisal expert must carry

out the appraisal process (for example, the way samples must

be collected). Thus, the insured party, who can also access

this information since it is published in the Official State

Gazette (Boletín Oficial del Estado), knows beforehand the

rules that must be followed in order to obtain a correct

assessment of the losses that have occurred.

Over these thirty years, two General Rules have been drawn

up, which are related to the agricultural and livestock

productions, and 33 Specific Rules have been created for

certain crops. The process for creating five more was begun

in 2008.

6.2 Appraisal

YEAR OFPUBLICATION

NAME GENERAL ASSESSMENTRULES

AGRICULTURAL PRODUCTIONS

LIVESTOCK PRODUCTIONS

YEAR OFLAST

MODIFICATION

20031986

2005

92

YEAR OFPUBLICATION

NAME SPECIFICASSESSMENT RULES

YEAR OFLAST

MODIFICATION

1987 CITRUS FRUITS 2003

1988 ONION 2001

1988 SPRING CEREAL 1989

1988 CHERRY

1988 STRAWBERRY AND

CHILEAN STRAWBERRY

1988 GREEN BEAN

1988 MELON AND WATERMELON 2007

1989 OLIVE FOR OIL

1989 TABLE OLIVE

1989 WINTER CEREAL

1989 CAULIFLOWER

1989 PULSES

1989 HOPS

1989 TABLE GRAPE

1989 WINE GRAPE

1989 HAZELNUT

1989 TOMATO, PEPPER AND 2007

AUBERGINE

1990 COTTON 1999

1990 TOBACCO

1992 LIMA BEAN

1992 GREEN PEA

1999 GARLIC

1999 SUNFLOWER

2000 BANANA

2001 COMPREHENSIVE CEREALS

2001 OLIVE GROVE YIELDS

2005 FRUIT TREES

2007 LETTUCE

2009 BLACKTHORN

2009 QUINCE

2009 POTATO

2009 ARTICHOKE

2009 RICE

Although data on the conflicts that have arisen from expert

assessment activity has not been collected in a systematic

manner throughout the entire period of this work, a gradual

improvement has been noted in this area. This signifies

greater knowledge on the part of both the insured party

(regarding the terms and conditions of their insurance policies

and the operation of the entire process) and the expert

appraiser. In short, the process has been made more

professional, resulting in greater security for both parties.

In any case, data on this matter has been collected

systematically over the last ten years. From this information,

if we take into account the average values, we can see that

almost 76,500 cases of agricultural assessment have been

carried out, of which an average of 2,077 cases involve some

form of “disagreement” (2.72%).

Within this category of “disagreements”, the percentage of

“contradictory” cases (i.e., cases in which a second expert is

brought in by the insured party) is an average of 1.25% (956

cases) of all the agricultural cases and of these, 87.21% are

resolved satisfactorily during this phase.

The cases in which a “third party” has been involved, during

this most recent decade, represent an average of 0.03% of

all the agricultural cases.

The main reason for disagreement is related to the damage

estimate (41.92% of all recorded reasons for disagreement).

In second place with 11.10% are the disagreements related

to the control samples that must mandatorily be left by the

farmer when the harvesting is carried out prior to the

appraisal. Lastly, disagreements related to “expected real

production” come in third with 8.75%.

In livestock productions, there is a much lower conflict rate,

given that almost 87% of the livestock cases are related to

the Collection & Disposal (C&D) lines. Breaking this area

down further, there has been an average of 111,500 cases

in the last five years, in other words, almost 12% of all the

livestock cases. Of these, 88.93% are related to breeding

and rebreeding cattle insurance, and of these only 0.21%

93

(264 cases) involved some form of “disagreement”.

Seventeen went through the “contradictory” process, most

of which were eventually “resolved”. No “third party” cases

have been recorded to date.

The more common disagreements stem from discrepancies

regarding the risk that caused the loss and, less frequently,

from the depreciation of the animals in relation to market

value due to uncovered risks.

YEAR AGRICULTURAL LIVESTOCK AQUACULTURE C & D TOTAL

1980 426 426

1981 20,682 20,682

1982 43,319 65 43,384

1983 83,638 85 83,723

1984 121,500 996 122,496

1985 123,500 703 124,203

1986 117,588 345 117,933

1987 94,090 631 94,721

1988 75,968 769 76,737

1989 96,178 728 96,906

1990 121,227 1,529 122,756

1991 118,630 3,825 122,455

1992 144,207 7,807 152,014

1993 104,972 12,405 117,377

1994 127,341 18,633 145,974

1995 138,203 25,967 164,170

1996 67,987 35,441 103,428

1997 132,845 37,858 170,703

1998 90,019 46,282 136,301

1999 130,203 56,803 1 187,007

2000 72,369 72,141 1 144,511

2001 105,294 92,304 2 1,073 198,673

2002 100,390 119,985 7 235,427 455,809

2003 63,758 123,517 5 390,966 578,246

2004 82,257 119,824 8 553,778 755,867

2005 112,493 127,212 2 684,216 923,923

2006 88,925 120,503 4 816,302 1,025,734

2007 85,537 122,031 4 903,024 1,110,596

2008 97,450 121,426 5 927,878 1,146,759

2009 89,605 119,233 2 899,000 1,107,840

TOTALS 2,850,601 1,389,048 41 5,411,664 9,651,354

(1) Claims: indemnities plus appraisal costs plus technical provision for these items

6.3 Claims(1)

The following table details the evolution of the numbers of

loss claims.

94

The year 2001 saw the start of the lines related to the

Collection and Disposal of dead animals on the farm (C&D).

During the first years, these lines included increasingly more

animal species in their covers, while at the same time the

area of application was extended to more Autonomous

Communities. This situation, together with the fact that the

request for Collection was recorded as a loss, led to an

exponential growth in the amount of loss during the first

years of the C&D insurances.

Nevertheless, over the last four years, the implementation of

these lines has stabilised, which in turn has been reflected in

the number of claims that have taken place due to the special

characteristics of this type of insurance.

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1980

1981

1982

1983

1984

1985

1986

1988

1989

1990

1987

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

EVOLUTION OF THE TOTAL NUMBER OF CLAIMS

2009

EVOLUTION OF THE NUMBER OF CLAIMS BY SECTOR

1,000,000

900,000

800,000

700,000

600,000

500,000

400,000

300,000

200,000

100,000

0

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

C & DAGRICULTURE LIVESTOCK AQUACULTURE

95

YEAR AGRICULTURE LIVESTOCK AQUACULTURE C & D TOTAL

1980 0.23 0.23

1981 9.22 9.22

1982 20.01 0.03 20.04

1983 49.12 0.05 49.17

1984 78.13 0.65 78.78

1985 86.71 0.50 87.21

1986 100.15 0.29 100.45

1987 72.61 0.19 72.81

1988 67.74 0.25 67.99

1989 115.58 0.33 115.90

1990 134.65 0.96 135.62

1991 159.72 1.44 161.16

1992 258.73 3.34 262.07

1993 132.00 5.40 137.40

1994 149.96 7.87 157.83

1995 219.04 11.55 230.59

1996 70.14 16.16 86.31

1997 169.89 19.35 189.24

1998 127.84 23.80 151.64

1999 284.71 28.02 0.25 312.99

2000 122.07 41.33 0.01 163.40

2001 242.53 47.44 3.82 0.44 294.23

2002 249.34 54.93 0.98 40.02 345.27

2003 160.46 50.80 2.38 58.03 271.67

2004 259.31 44.03 5.30 70.26 378.90

2005 395.31 110.02 0.03 89.56 594.92

2006 255.40 45.26 0.10 117.70 418.47

2007 277.43 47.75 0.01 135.41 460.61

2008 330.82 52.18 3.44 138.52 524.97

2009 349.34 70.60 4.00 133.03 556.97

TOTALS 4,948.21 684.53 20.32 782.98 6,436.04

Value in millons of euros.

is related to the insurance that covers damages due to a lack

of grazing lands. Major droughts were recorded during both

years. As a result, in 2005, almost 60 of the 110 million

euros paid for livestock loss corresponded with damages due

to a lack of grazing lands. In 2009, approximately 13 million

were due to this type of damage.

Lastly, with regard to aquaculture, the peaks in loss rate tend

to be associated with periodic sea storms.

Due to the special characteristics of livestock insurances, the

evolution of the animal loss rate is normally based on how

the purchasing of insurance evolves. This is what happens,

for example, with the loss rate of the C&D insurances, in

which we can see high similarity and linearity with regard to

the evolution of the policies that are contracted.kkkkkkk

Even so, there are some exceptions, since there are years in

which the loss rate differs with the pattern of how much

insurance is purchased. This was the case in 2005 and 2009

with regard to livestock. The reason for this increase in losses

EVOLUTION OF LOSS RATE

96

0

100

200

300

400

500

600

1980

1981

1982

1983

1984

1985

1986

1988

1989

1990

1987

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

EVOLUTION OF LOSS RATE

2009

Value in millons of euros.

As regards the total cost of loss during these 30 years, 76%

of the value corresponds to agricultural losses, 10% are

attributed to livestock loss and 12% to the C&D lines.llllllllll

The agricultural lines show the danger and variability of the

covered risks, which are evident through the very low loss

rate of 1996 and the somewhat “normal” rates of 2004 and

2006, in comparison with the very high loss rates recorded

in 1992, 1995, 1999 and especially in 2005, with the System

already well-balanced.

The year 1992 was characterised by a major drought that

had begun in 1991 and peaked in that year, with a greater

impact on the herbaceous crop insurances. The year 1999 is

also of special note due to a major drought, in addition to

the losses caused by hail in the citrus fruit, fruit tree and

herbaceous crop productions. Lastly, 2005 saw severe frosts

at the beginning of the year, a severe mid-year drought that

caused heavy damage to the herbaceous crops, and a tropical

cyclone at the tail end of the year that hit banana production

in the Canary Islands.

Value in millons of euros.

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

450

400

350

300

250

200

150

100

50

0

EVOLUTION OF LOSS RATE BY SECTOR

C & DAGRICULTURE LIVESTOCK AQUACULTURA

97

RAIN - PERSISTENTPIXAT2.30%

WIND 5.16%

DROUGHT - SCORCHINGNON EMERGENCE

16.90%

FROST - EARLY FROST21.82%

FIRE 0.96%

HAIL - EARLY HAIL44.76%

POOR SETTINGPOOR FLOWERING

5.90%

OTHER1.78%

FLOOD0.42%

DISTRIBUTION OF THE COST OF AGRICULTURAL LOSS BY RISK 1980-2009 PERIOD

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

HAILEARLY HAIL

35.00%

40.00%

45.00%

50.00%

FIRE FROSTEARLY FROST

DROUGHTSCORCHING NON

EMERGENCE

WIND RAINPERSISTENTRAIN PIXAT

FLOOD OTHER POOR SETTINGPOOR FLOWERING

DISTRIBUTION OF THE COST OF THE CLAIMS AND NUMBER OF AGRICULTURAL LOSSES PER RISK.

1980-2009 PERIOD

Loss rate No. of losses

DROUGHT - SCORCHINGNON EMERGENCE

14.65%

WIND8.39%

RAIN - PERSISTENTPIXAT4.38%

FLOOD0.90%

POOR SETTINGPOOR FLOWERING

1.08%OTHER2.36%

FROST - EARLY FROST25.63%

FIRE1.00%

HAIL - EARLY HAIL41.61%

DISTRIBUTION OF THE NUMBER OF AGRICULTURAL CLAIMS BY RISK 1980-2009 PERIOD

98

Based on the data, it is clear that almost 82% of the declared

claims correspond to the three risks of hail, frost and drought,

which represent 83.5% of the losses paid throughout the

entire historical series.

Hail risk represents, without a doubt, the greatest percentage

of claims and indemnities. Various factors contribute to this

situation, like the fact that this risk is present in all the series

and all the covers of the marketed lines. Moreover, the sum

insured is 100% with a damage excess of 10%, which

determines its level of loss, and of course it is a risk inherent

to the Peninsula's weather.

From this point-of-view, although both frost and drought are

risks that have been covered throughout almost all the

historical series, these covers have not been, nor are they

now, included in all the insurance lines. Thus they are related

to a lower number of claims in comparison with hail.

With the rest of the risks, which individually do not signify a

large amount in comparison with the total, we must take

into account (in addition to the same previously-mentioned

considerations related to their inclusion in certain insurance

lines) the applied excesses, most of which are around 30%.

We should also point out their importance with regard to the

virulence of these risks in certain geographic areas and

affected crops.

The financial impact or high cost of the crops in relation to

the number of claims and loss rate is particularly noteworthy.

In this regard, we can see the performance of poor setting

with significant differences between both magnitudes, in

addition to the fact that it was only implemented in the last

decade.

99

6.4 The biggest losses in thesystem’s history

Throughout the entire insurance organisation, regardless

of whether they are individual institutions or, as in the case

of the Spanish Agricultural Insurance System, a pool of

insurance companies, important events have occurred

throughout their particular history which mark the activity's

development.

Therefore, we present the data related to what could be

considered the biggest losses in the System's history in order

to illustrate this thirty-year period. They are considered big

losses due to the area of the damage, the assets affected

and the volume of indemnities paid, as well as how this

volume compares with the total paid during that specific

year.

6.4.1 Hail

For the purposes of its cover by the Agricultural Insurance

System, hail is defined as an atmospheric precipitation of

frozen water in a solid and amorphous form that, due to its

impact, causes the insured product to suffer a loss as a result

of traumatic damage.

The analysis has focused on the plant productions, since

both livestock (due to the nature of the insured assets and

covers) and aquaculture (due to its recent incorporation into

the System) have not seen losses of a noteworthy

magnitude.

This should make it possible, once again, to reflect on the

danger of this type of insurance activity and the suitability

of the co-insurance formula for covering these risks, which

can often have catastrophic financial consequences for

agriculture professionals.

100

6.4.1.1 Map of the distribution of the risk

6.4.1.2 The biggest hail losses

1988.- Vineyards

• Date: 9 June.

• Area of damage:

Hectares: 154,536

Provinces: Ciudad Real, Toledo, Albacete and Cuenca.

• (1) Value of damaged assets in relation to value of insured asset: ................................................................... 7.00%

• (2) Indemnities in relation to the total net premium: ................................................................................... 118.00%

• Resulting loss rate in relation to the type of insured crop: ............................................................................. 99.69%

• (3) Resulting loss rate in relation to the total loss rate for the year: .................................................................. 8.00%

Bands

Very lowLowModerate-lowModerateModerate-mediumMediumMedium-highHighVery-high

HAIL RISKRegional Data

Hereinafter:

(1) This rate always refers to the insured assets of the crop mentioned.

(2) This rate always refers to the total amount of the accrued net premium

in relation to the crop mentioned.

(3) Loss rate: indemnities paid plus appraisal costs. The “total loss rate” is

related to all the insurance lines that exist at that time.kkkkkkk

101

2007.- Vineyards

• Date: 23 May.

• Area of damage:

Hectares: 34,574

Provinces: Ciudad Real, Toledo, Cuenca and Albacete.

• Value of damaged assets in relation to value of insured asset: ...................................................................... 12.20%

• Indemnities in relation to net premium: ...................................................................................................... 279.10%

• Resulting loss rate in relation to the type of insured crop: ............................................................................. 29.67%

• Resulting loss rate in relation to the total loss rate for the year: ...................................................................... 5.20%

NOTE.-

Very intense hail created by a rare meteorological

phenomenon during a very sensitive state for the vineyard,

causing extensive damage. Based on the magnitude of the

loss, the average damage is estimated at greater than 65%.

2009.- Fruit

• Date: 1 August.

• Area of damage:

Hectares: 12,394

Provinces: Lleida and Huesca.

• Value of damaged assets in relation to value of insured asset: ...................................................................... 63.00%

• Indemnities in relation to net premium: ...................................................................................................... 211.80%

• Resulting loss rate in relation to the type of insured crop: ............................................................................. 43.78%

• Resulting loss rate in relation to the total loss rate for the year: .................................................................... 49.00%

NOTE.-

A total of 43.78% of the losses related to this type of

affected crop occurred in only two provinces, in addition to

the fact that the loss occurred at the beginning of the

harvesting, with most of the fruit already ripe and ready for

immediate sale.

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6.4.2.1 Map of distribution of frost risk affecting wine grapes

6.4.2 Frost

For the purposes of its cover by the Agricultural Insurance

System, frost is understood as a temperature equal to or

less than the minimal critical temperature in each of the

phases of the crop's vegetative development which, due to

ice formation on the tissue, causes a loss in production as

a result of the irreversible lesions suffered by the different

parts of the plant.

Given the complexity of creating a single frost risk map

for the different plant species and varieties in Spain, we

have opted to provide just the map related to wine grapes,

a crop which, due to its characteristics and distribution,

could be considered generally representative of frost risk.

Bands

Very lowLowModerate-lowModerateMediumMedium-highHighVery high

FROST RISKRegional data

103

6.4.2.2 The biggest frost losses

1986.- Fruit

• Date: 14 April.

• Area of damage:

Hectares: 10,100

Provinces: Zaragoza, Navarra, Lleida, Murcia, Huesca, Cáceres and Badajoz.

• Value of damaged assets in relation to value of insured asset: ...................................................................... 48.90%

• Indemnities in relation to net premium: ...................................................................................................... 508.70%

• Resulting loss rate in relation to the type of insured crop: ............................................................................. 88.39%

• Resulting loss rate in relation to the total loss rate for the year: .................................................................... 11.20%

1991.- Vineyards

• Date: 25 April and 5 May.

• Area of damage:

Hectares: 250,089

Provinces: Ciudad Real, Toledo and Albacete.

• Value of damaged assets in relation to value of insured asset: ...................................................................... 22.00%

• Indemnities in relation to net premium: ...................................................................................................... 434.00%

• Resulting loss rate in relation to the type of insured crop: ............................................................................. 93.09%

• Resulting loss rate in relation to the total loss rate for the year: .................................................................... 23.70%

2001.- Olive groves

• Date: 20 and 27 December.

• Area of damage:

Hectares: 15,451

Provinces: Tarragona and Lleida.

• Value of damaged assets in relation to value of insured asset: ...................................................................... 30.29%

• Indemnities in relation to net premium: ...................................................................................................... 509.00%

• Resulting loss rate in relation to the type of insured crop: ............................................................................. 99.78%

• Resulting loss rate in relation to the total loss rate for the year: ...................................................................... 3.00%

104

2004.- Fruit

• Date: 3 March.

• Area of damage:

Hectares: 11,797

Provinces: Murcia, Alicante and Valencia.

• Value of damaged assets in relation to value of insured asset: ...................................................................... 45.00%

• Indemnities in relation to net premium: ...................................................................................................... 834.00%

• Resulting loss rate in relation to the type of insured crop: ............................................................................. 84.45%

• Resulting loss rate in relation to the total loss rate for the year: ...................................................................... 5.00%

2005.- Olive groves

• Date: 27 and 28 January and 4 February 2005.

• Area of damage:

Hectares: 9,525

Provinces: Cádiz, Córdoba, Granada, Jaén, Málaga and Sevilla.

• Value of damaged assets in relation to value of insured asset: ........................................................................ 4.00%

• Indemnities in relation to net premium: ...................................................................................................... 182.00%

• Resulting loss rate in relation to the type of insured crop: ............................................................................. 96.13%

• Resulting loss rate in relation to the total loss rate for the year: ...................................................................... 4.00%

NOTE.-

The magnitude of the frost was so extensive that it not only

affected the production of the current year, but also that of

the following year, as it caused irreversible damage to the

trees. Frosts with these characteristics have only occurred

three times over the last 50 years.

2005.- Citrus fruits

• Date: 27-28 January and 4 February.

• Area of damage:

Hectares: 12,867

Provinces: Alicante, Valencia and Castellón.

• Value of damaged assets in relation to value of insured asset: ...................................................................... 31.00%

• Indemnities in relation to net premium:....................................................................................................... 554.00%

• Resulting loss rate in relation to the type of insured crop: ............................................................................. 58.79%

• Resulting loss rate in relation to the total loss rate for the year: ...................................................................... 7.00%

2005.- Fruit tress

• Date: 27-28 January and 4 February.

• Area of damage:

Hectares: 7,644

Provinces: Valencia, Alicante, Murcia and Almería.

• Value of damaged assets in relation to value of insured asset: ...................................................................... 26.00%

• Indemnities in relation to net premium: ...................................................................................................... 431.00%

• Resulting loss rate in relation to the type of insured crop: ............................................................................. 64.04%

• Resulting loss rate in relation to the total loss rate for the year: ...................................................................... 6.00%

106

6.4.3 Drought

For the purposes of its cover by the Agricultural Insurance

System, a drought affecting dry farming can be defined as

the lack of dampness in the ground that adversely affects

the crop's production and/or the growth of natural

vegetation. A drought affecting irrigated farming is the lack

of water to supply the irrigation systems due to a shortage

6.4.3.1 Map of distribution of drought risk affecting dry farming

This map takes into account the yields for winter cereals.

in surface and/or groundwater, which is required for

agricultural use.

In this section, we only refer to drought affecting dry

farming.

Bands

Unfarmed/croplessLowModerateMediumHigh

DROUGHT RISKREGIONAL DATA

107

Drought is considered an endemic risk of the Iberian

Peninsula and is normally associated with the cereal crop.

Its cover was one of the main objectives of the new

insurance system created in 1978.

As part of the analysis of the biggest losses mentioned in

this section, it is appropriate to comment on the "damaged

hectares" - “total loss for the year” relationship. Although

one could think that greater or lesser impact depends on

the intensity of the damage produced more than the area

of damage, it is no less true that during the first years of

the System, the weight of cereal insurance was much greater

than it is today, and thus the impact of the loss on the

System was much higher in those days.

Let us take for example the case of the year 1986, where

with 384,000 damaged hectares, the impact of the loss was

51%, while in 2005, with almost 1.3 million damaged

hectares, the impact was 28%. Once again, the law of large

numbers.

1986.- Cereal

• Area of damage:

Hectares: 384,000

Provinces: Huesca, Zaragoza, Valladolid and Burgos

• Value of damaged assets in relation to value of insured asset: ....................................................................... 44.40%

• Indemnities in relation to net premium:.................................................................................................... 2,370.00%

• Resulting loss rate in relation to the type of insured crop: ............................................................................. 93.78%

• Resulting loss rate in relation to the total loss rate for the year: ..................................................................... 51.40%

6.4.3.2 The biggest drought losses

1992.- Cereal

• Area of damage:

Hectares: 1,071,577

Provinces: Cádiz, Córdoba, Granada, Huelva, Sevilla, Albacete, Ciudad Real, Cuenca, Guadalajara, Toledo,

Huesca, Teruel, Zaragoza, Ávila, Burgos, Palencia, Salamanca, Segovia, Soria, Valladolid, Zamora, Badajoz and

Madrid.

• Value of damaged assets in relation to value of insured asset: ...................................................................... 61.10%

• Indemnities in relation to net premium: ..................................................................................................... 849.30%

• Resulting loss rate in relation to the type of insured crop: ............................................................................ 96.10%

• Resulting loss rate in relation to the total loss rate for the year: ................................................................... 66.90%

108

6.4.4 Wind

For the purposes of its cover by the Agricultural Insurance

System, wind is considered to be the violent movement of

air which, due to its intensity and physical force, causes

losses in the insured product, resulting in clearly visible tears,

breaks or fallen plants or branches, in addition to the evident

damage or stress caused by this meteorological

phenomenon on the damaged plot of land.

1995.- Cereal

• Area of damage:

Hectares: 1,242,529

Provinces: Cádiz, Granada, Jaén, Cuenca, Ciudad Real, Sevilla and Córdoba.

• Value of damaged assets in relation to value of insured asset: ...................................................................... 60.00%

• Indemnities in relation to net premium:....................................................................................................... 291.50%

• Resulting loss rate in relation to the type of insured crop: ............................................................................. 96.26%

• Resulting loss rate in relation to the total loss rate for the year: ..................................................................... 43.00%

2005.- Cereal

• Area of damage:

Hectares: 1,296,550

Provinces: Albacete, Cádiz, Cuenca, Guadalajara, Sevilla, Soria Teruel and Valladolid.

• Value of damaged assets in relation to value of insured asset: ...................................................................... 64.00%

• Indemnities in relation to net premium:....................................................................................................... 306.00%

• Resulting loss rate in relation to the type of insured crop: .............................................................................. 99.34%

• Resulting loss rate in relation to the total loss rate for the year: ..................................................................... 22.00%

109

6.4.4.1 Map of distribution of wind risk

This map is based on the following parameters: maximum

gust of wind, average gust of wind and return period.

Bands

Very lowLowModerateMediumHighVery high

WIND RISKRegional Data

2005.- Tropical storm delta

• Date: 28 and 29 November.

• Area of damage:

Hectares: 6,106

Provinces: Las Palmas de Gran Canaria and Tenerife.

• Value of damaged assets in relation to value of insured asset: ...................................................................... 48.85%

• Indemnities in relation to net premium: ...................................................................................................... 274.00%

• Resulting loss rate in relation to the type of insured crop: ............................................................................. 96.00%

• Resulting loss rate in relation to the total loss rate for the year: ...................................................................... 3.10%

6.4.4.2 The biggest wind losses

7 R&D&I in agricultural insurance

The very nature of an activity as specific as agricultural

insurance, which requires detailed statistical knowledge of

the probability of climatic phenomena (such as hail, frost,

drought or flooding) as well as knowledge of the

performance of the different plant productions throughout

their development cycle, created the need for research as a

way to gain a better understanding of the meaning of the

variables and factors that come together in the final cover

offered to agricultural professionals in the form of insurance.

This task was assumed practically from the beginning of the

System by its manager, AGROSEGURO, which is a highly

specialised institution due to the type of risks to be covered

and the agricultural and livestock productions to be

protected.

Thus, it was clear from the start that the research to be

conducted in each case should be research that could be

"applied" directly to the fundamental objective: to create

covers that were adapted to the reality of the risk and of the

production to be protected and to have reliable methods to

verify the damage caused (adjustment techniques) and to

improve the knowledge that would be gathered.

The information below shows some examples of this

"applied” research, which has always depended on university

collaboration.

7.1 Identifying the insured riskusing the symptomatologythat appears on the affectedstock. Determining thedamage caused to crops bythe insured risk.

These two issues can be considered the basic pillars of

appraisal. The first case, identification using symptomatology,

is an attempt to distinguish the insured risk from others,

which coincide in time and may or may not be covered and

have a very similar “a priori” appearance.

In the second case, the idea is to determine the damage

when the lost or affected stock is not the final harvest (e.g.

with melon, the total loss of the aerial part may result in a

loss of anywhere from 0% up to 30% depending on the

plant's development phase).

As regards symptomatology, research conducted or led by

AGROSEGURO has focused on the specific symptoms caused

by spring frosts in stone and pome fruit trees.

In general, frost sensitivity increases from the start of winter

rest to full flowering. But, given the fact that the occurrence

of a meteorological frost may not be enough to determine

the frost damage to a fruit tree species, it is necessary to

look at the plant tissues and verify that they show specific

frost symptoms that are different from other causes such as

a lack of fruit set, pests, diseases, phytotoxicities, a lack of

winter cold, etc.

For the purpose of gaining a deeper understanding of the

different aspects related to the effects of frost (and in addition

to the project described in the following section),

113

AGROSEGURO has a collaboration agreement with the

University of Navarre to study the symptomatology of frost,

simulating frosts in chambers and comparing the

observations with fieldwork.

With regard to the second “pillar” of assessing damage, its

quantification, AGROSEGURO has been working on, for

example, determining indirect damage (caused by defoliation)

by simulating hail damage. There are many crops where the

incidence of risk affects plant parts that do not directly

comprise the final product; for example, all crops in which

the harvested part is underground, such as potatoes, beets,

onions, garlic, etc. There are also cases where the disaster

occurs during a crop phase prior to flowering and fruiting,

causing damage to the plant part which will have an effect

on the production (sunflowers, corn, broccoli, cauliflower,

etc).

In these situations, the risks covered by agricultural insurance,

and in general any adverse weather, directly affect the plant

by reducing its foliar surface. This is understood by the plant

as a possible risk to its survival. Thus, its first reaction is the

regeneration of foliar surface which redistributes the nutrient

flow. Depending on the growth phase, this could cause a

reduction in size, in the number of inflorescences or in the

size of the fruit.

This damage can only be measured if there is an undamaged

control plant that is under the same growing conditions. The

only way to achieve this is by simulating the damage caused

by different risks (primarily, hail and wind). This has led to

the need for collaboration from universities in order to perfect

both the simulation methods as well as the determination of

the final damage on the harvest by estimating the foliar mass

loss.

Tests of this type have been conducted since 1992. A variety

of universities (Public University of Navarre, Polytechnic

University of Madrid, School of Agricultural Engineering in

Ciudad Real, etc.) have collaborated on these tests. Thus,

there have been many joint projects as the tests have been

conducted on a very high number of crops, such as: melon,

General view of a test showing the different damage caused during a certain part of thegrowth cycle.

Defoliación alta Defoliación media Defoliación leve Testigo

114

sunflower, potato, beets, green bean, beans, cauliflower,

onion, seed potatoes, rice, garlic, etc.

The final result is shown in tables that link the defoliation

produced in the plant for a specific phase of the cycle to

In the beginning, this research project, which obtained the

EUREKA label in 1999 and has been funded with a loan from

the Centre for Industrial Technological Development (CDTI

by its Spanish initials), was carried out by AGROSEGURO in

collaboration with the National Agricultural Research Institute

(INIA) in Madrid. During the final phase since 2007, it has

7.2 Isolation andcharacterisation ofsynthesized proteins inresponse to frost in fruittree species

been carried out in collaboration with the Biological Research

Centre (CIB) in Madrid, which belongs to the Spanish High

Council for Scientific Research (CSIC).

The risk of frost is one of the risks that most systematically

affect stone fruit trees, even though a few days after the risk

occurs, the damage caused to the recently set fruit can be

macroscopically confused with damage produced by other

causes, such as, for example, a deficient fruit set.

Based on the fact that it has been scientifically proven that

there are proteins in plant tissues that are induced in response

to different types of environmental stress, including cold

weather, it was decided that the objective of this project

would be to identify changes in the peptides or proteins of

fruit species caused by frost. In this way, a kit could be

developed that, through a colorimetric reaction, would make

it possible to distinguish, in the field, the fruit organs that

are frozen from those that are not, with the greatest possible

certainty.

As a result of this research conducted over the last ten years

by Maria Virtudes Andrés, a Doctor of Biology who works

for AGROSEGURO, four peptides have been separated and

identified that are capable of being frost markers. They have

already been presented to the Spanish Patent and Trademark

Office, together with the CSIC.

crop losses. This is normally used as the basis for the table

shown in the Specific Adjustment Standards for the crop in

question.

115

7.3 Fruit tree productionpotential method

Within the agricultural sector, the fruit production

subsector in our country is one of the most specialised and

most important, as it represents up to 11% of all plant

production. And within the Agricultural Insurance System,

the insurance lines for fruit productions are at the top with

regard to premium reserves and the value of the insured

production.

One of the most important aspects for fruit growers is

estimating what level of production will be obtained under

normal conditions on their farm well enough in advance.

These estimates are often done before flowering,

accompanied by the difficulty that the plants have not begun

developing and knowing that, in order to obtain a normal

production, only 3% to 20% of the flowers need to form

into fruit.

Through its different lines of fruit tree insurance, with “frost”

risk cover since 1981 and “poor setting” cover since 2002,

agricultural insurance protects against reductions in real

production obtained in comparison with production capacity.

These are risks that often occur in the first stages of fruit

development, during or prior to flowering when the fruit has

not yet appeared, making it very difficult to determine the

farm's production capacity.

This is why research and the results that are being obtained

in the field of "production potential" of different fruit species

and varieties are so important.

For the purpose of obtaining a reliable method for

determining the production capacity of a fruit farm,

AGROSEGURO has signed various collaboration agreements

with the Public University of Navarre to search for a method

that is capable of assessing this capacity by using objective

parameters that can be used in the absence of a harvest.

The short-term objective is to obtain antibodies against

specific frost proteins in peach trees (Prunus persica), which

in the future will enable the development of a frost diagnostic

test in the field.

116

This collaboration has led to the design of mathematical

models that correlate various easy-to-measure parameters

during the vegetative rest of the trees, such as:

• Species. Different models are applied depending on the

species.

• Variety. The growth capacity of the fruit is a general

characteristic.

• Tree vigour. Measured in cm2 and estimated using the

trunk section that begins some 15 cm above the graft.

This indicates the tree's capacity to offer water and

nutrients.

• Plant density. By measuring the spacing of plants, the

land surface assigned to each tree, and therefore the

competition between trees, can be determined.

• Pruning load. In other words, depending on the quantity

of productive shoots left after pruning. For stone fruit

trees, this is the quantity of shoots (fruiting shoots and

spurs) that are left on the tree and their length.

• Fruit load. In pome fruit trees, this is the quantity of

fruiting buds.

The first studies that were done were on the most important

crops: peach trees, apple trees and pear trees. They began

in 1997 and continued until 2001.

From 2001 to 2003, studies were carried out on the Japanese

plum tree and finally, in 2005 and 2006, tests with the cherry

tree were conducted.

The result of all of this research was the creation of a

methodology which uses mathematical models to correlate

the parameters listed above in accordance with the different

crops. This makes it possible to estimate, with a significant

degree of certainty, the production capacity of the tree in

question. In this way, an assessment can be made of the

damage caused by risks that occur during the first phases of

fruit development, which result in decreased production.

117

As was already mentioned in Chapter 2 of this work, one

of the milestones in the history of the Spanish system was

the introduction of cover for a lack of vegetation in grazing

lands used to feed livestock.

This cover is based on what is known as NDVI (Normalized

Difference Vegetation Index), a scientifically proven indicator

of vegetation activity and, in short, of the quantity and vigour

of the vegetation on the land.

Historic images captured from 1986 until 2000 by the NOAA

satellite with a spatial resolution of 1 x 1 km2 were first used,

always with assistance from the Remote Sensing Laboratory

of the Department of Applied Physics at the University of

Valladolid (LATUV). (In 2010, the TERRA and AQUA satellites

have been used, which have MODIS sensors that provide a

resolution of 250 x 250 metres (in other words, 6.25 Ha) and

therefore greater accuracy.)

The insurance is based on the comparison carried out by

LATUV of the aforementioned index (NDVI), which is

measured every 10 days, with the average of the same ten

measurements for the same uniform grass area. This means

that a loss is considered to exist when the result of the

measurement is lower by a certain percentage than the

average obtained for those ten measurements.

Prior to this comparison, the applied research made it possible

to draw up a map of Spain divided into 343 regions and

establish for each one of them: the NDVI evolution over one

year according to the historic average; a second curve under

the historic curve that marks a certain level of vegetation

scarcity; and finally, a third curve that marks a deeper level

of vegetation absence.

The compensation that is paid to the livestock farmer per

head of livestock declared in the insurance policy increases

as the NDVI decreases.

7.4 Satellite measurement ofthe vegetation index

The measurements are placed in groups of ten in order to

get around the fact that on certain days during a ten-day

period, the satellite cannot take images of the area due to

cloudiness. Once three ten-day periods are below the second

and third curves, the livestock farmer is paid compensation

for the entire period within the two “seasons” into which

the year is divided for insurance purposes.

Thus, thanks to this technology, it is possible to establish the

behaviour of the grazing lands all across Spain and always in

accordance with the regular climate of any given region.

118

The current vegetation index is above average. There is no drought situation.

The vegetation index is below average, but does not indicate a loss.

The vegetation index is below average and indicates a loss.

The vegetation index is below average and indicates a very serious loss.

NDVI-A > AVERAGE

A > NDVI-A > B

MEDIA > NDVI-A > A

B > NDVI-A

REGION OF CASTUERA (BADAJOZ)

IMAGE FROM THE AVHRR SENSOR ON THE NOAA SATELLITE DURING THE TEN-DAY

PERIOD 21/11/2009-30/11/2009

119

EVOLUTION CURVES FOR THE NDVI VEGETATION INDEX IN THE REGION

OF CASTUERA (BADAJOZ), 2008 PLAN

- 2008 Plan: Vegetation index throughout the cover period (December 2008 - November 2009)

- Average: Historical average from 1987-2006 of the vegetation index in that region for each ten-day period

- Stratum A: Curve below the average that establishes the first loss threshold

- Stratum B: Curve below stratum A that establishes the second loss threshold

Des Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

Summary:

Guaranteed stratum Tens

NDVI-A>AVERAGEMEDIA >NDVI-A>AA > NDVI-A > BB > NDVI-ANo coverage

B

A

12

3

80

70

60

50

40

30

20

10

1DD

2DD

3DD

1DE

2DE

3DE

1DF

2DF

3DF

1DM

2DM

3DM

1DA

1DA

3DA

1DY

2DY

3DY

1DJ

2DJ

3DJ

1DX

2DX

3DX

1DG

2DG

3DG

1DS

2DS

3DS

1DO

2DO

3DO

1DN

2DN

3DN

Veg

etat

ion

ind

ex

Tens

AVERAGE STRATUM A STRATUM B 2008 PLAN

8 Protection for insuredparties

122

Irrespective of the administrative and jurisdictional mechanisms

protecting insured parties that are established and

encouraged in our country by the various regulations that

oversee insurance entities, the figure of the Insurance

Ombudsman appeared for the first time in the Spanish

insurance sector in 1984 by decision of the MAPFRE Group

Board under the name Insurance Ombudsman Committee.

At first, it focused on the insured parties of MAPFRE

MUTUALIDAD (Automobile Insurance) and was later

extended to all of the Group's insurance branches.

It was not until 1995 (with Spanish Act 30/1995 of 8

November on the Planning and Supervision of the Private

Insurance Sector) when, in line with the already well-

established practice in other European Economic Community

states, the two lines that can be used by insured parties to

defend their interests against insurance companies were

created, always irrespective of legal recourse: the process of

filing a claim with the Insurance Supervisory Authority (Sec.

62) and the process involving the Insurance Ombudsman

(Sec. 63).

In the first case (Sec. 62), the Supervisory and Control Body

is responsible for receiving and processing, where

appropriate, complaints and claims sent by insurance policy

subscribers. In the second case (Sec. 63), the Act provides

for the possibility that insurance entities, either individually

or in groups, may “…designate independent entities or

experts of renowned prestige as the insurance Ombudsman

before whom the claims…that are presented by insurance

policy holders, insured parties, beneficiaries, injured third

parties and rightful claimants against these entities are

voluntarily submitted for a decision”. (Both cases are

respectively outlined in Sections 108 and 109 of the Act's

Regulation).

Subsequently, Spanish Act 44/2002 of 22 November on

Financial System Reform Measures set forth as one as its

objectives to provide financial services users with possible

ways to present their complaints, claims or queries to the

supervisory authorities. In Chapter 5, it established the figure

of the Commissioner, one for each supervisory body in our

financial system, the Bank of Spain, the Supervisory Authority

for Insurance and Pension Funds and the National Securities

Market Commission (CNMV).

Thus, as defined by the Act, administrative bodies belonging

to these authorities shall “absorb” the respective claims

services or administrative units, that already exist, under the

terms of Section 27 of Act 44/2002.

In order to implement the provisions of this Act, Spanish

Royal Decree 303/2004 of 20 February was enacted to

approve the Regulations on Commissioners in defence of

financial service customers. In Section 8, it sets forth that in

order for complaints or claims to be admissible before the

Commissioner, they must first be submitted and processed

by the customer service department, or where appropriate,

by the customer Ombudsman of the financial entity against

which the complaint or claim is submitted.

Lastly, Order ECO/734/2004 of 11 March, on customer service

departments and services and the customer Ombudsman of

financial entities, was approved on 11 March (Official Spanish

Gazette dated 24 March).

For the time being, this regulation concluded the

implementation of the provisions established in the 2002

Act, which set forth that the financial entities concerned

"...must have a specialised customer service or

123

department..." (Sec. 1.1) even though, they may also

"...designate a customer Ombudsman who handles and

resolves all types of claims that are submitted for a

decision…” (Sec. 1.2).

In any case, either the customer service, if only this exists, or

this service plus, where appropriate, the Customer

Ombudsman, shall have a period of two months to resolve

these matters. Once this period has passed, the claimant

may contact the corresponding Commissioner, in this case

the Supervisory Authority for Insurance and Pension Funds.

As is logical, agricultural insurance could not remain outside

this movement towards defending and protecting the

interests of insured parties through means that were more

flexible and less expensive than the traditional legal

procedures.

Nevertheless, and given that all of the activity carried out in

this sector of the national economy was conducted through

a co-insurance pool managed by AGROSEGURO, a decision

was made to provide the System with an Insurance

Ombudsman, from the very beginning and under the

provisions of Section 62 of the 1995 Act on Planning and

Supervision of the Private Insurance Sector. In line with the

already experienced model developed by the MAPFRE Group,

this figure would provide a quick, effective and free response

to the complaints and claims filed by individual agricultural

and livestock farmers, as insured parties, against the decisions

taken by AGROSEGURO on behalf of the insurance

companies grouped together in the co-insurance pool.

Therefore, in 1997, the AGROSEGURO Ombudsman

Institution was created, appointing Mr. Federico Carlos Sainz

de Robles to fill the position. He was already at that time a

figure of renowned prestige in the world of law and had

held the offices of President of the Supreme Court and

President of the General Council of the Judicial Branch.

In addition, AGROSEGURO has operated a Claims Service

since 1995.

Afterwards, and as a result of the necessary modifications

introduced into this line of action by the aforementioned Act

44/2002 of 22 November and its implementing regulations,

the entire operation of these services was adapted to the

new demands, primarily with regard to the need to resolve

a claim within a maximum period of two months. Thus, the

new Customer Service and Customer Ombudsman

Regulations were approved by the AGROSEGURO Board of

Directors, which in turn were approved by the Supervisory

Authority for Insurance and Pension Funds by means of a

Resolution dated 30 November 2005.

Thus, the Spanish Agricultural Insurance System has had a

two-fold structure since 1997 for protecting the interests of

agricultural and livestock farmers who decide to protect their

business through insurance. On the one hand, the Claims

Service which is part of the AGROSEGURO organisational

structure, and on the other hand, the Insurance Ombudsman,

which is a figure and service that is independent of the

Group.

124

8.1 Customer service

Customer Service is a service offered by the Spanish

Agricultural Insurance System for the purpose of studying

the complaints and claims that are submitted and which

derive from a combined agricultural insurance policy.

During the last 13 years, Customer Service has received

5,044 claims, representing 0.09% of all AGROSEGURO

policies for that same period, with 26.62% of them deemed

founded.

CLAIMS

RECEIVED

ACCEPTED

REJECTED

PENDING

2009

305

103

179

23

2008

279

111

168

0

2007

368

73

295

0

2006

466

76

390

0

2005

553

88

465

0

2004

446

108

338

0

2003

352

114

238

0

2002

456

116

340

0

2001

428

95

333

0

2000

272

93

179

0

1999

369

112

257

0

1998

359

127

232

0

1997

391

116

275

0

0

100

200

300

400

500

600

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997

EVOLUTION OF CLAIM PROCESSING BY CUSTOMER SERVICE

RECEIVED ACCEPTED REJECTED

125

The types of claims can be classified into two large groups:

first, those related to the contracting process including issues

such as increased yields, procedures past the established

deadlines, discounts or contract errors, the latter accounting

for 57% of the claims.

The second group is comprised of claims related to the damage

assessment and appraisal processes and includes issues such

as disagreements with the appraisals (59% of all these types

of claims), the rejection of samples considered invalid, errors

on appraisal records, etc.

8.2 Customer ombudsman

The Customer Ombudsman is an Institution that is independent

of AGROSEGURO and has the right to resolve claims based

on legal or equity criteria. On behalf of the insurance companies

in the pool, AGROSEGURO has committed to complying with

these resolutions up to an amount of 120,000 euros.

Since it was implemented in 1997, this Service has received

914 claims with 199 deemed to be founded (21.77%).

CLAIMS

RECEIVED

FOUNDED

REJECTED

NOT PROCESSED SINCE

THE REQUEST FOR A

RESOLUTION WAS NOT FIRST

PRESENTED TO CUSTOMER

SERVICE (CS)

NOT ADMITTED FOR PROCESSING

FOR VARIOUS REASONS

PENDING RESOLUTION

2009

48

9

26

0

9

4

2008

42

1

29

7

5

0

2007

102

2

81

9

10

0

2006

97

12

85

0

0

0

2005

103

41

62

0

0

0

2004

107

26

25

49

7

0

2003

69

23

35

3

8

0

2002

95

18

68

4

5

0

2001

84

20

50

9

5

0

2000

51

20

21

9

1

0

1999

25

7

11

6

1

0

1998

45

14

14

16

1

0

1997

45

6

7

22

10

0

0

20

40

60

80

100

120

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997

CLAIM PROCESSING BY THE CUSTOMER OMBUDSMAN SERVICE

RECEIVED FOUNDED REJECTED NOT PROCESSED

126

8.3 Satisfaction surveys

In a world that is as specialised as the management of risks

to which agricultural and livestock farmers are subject, the

primary objective of the Spanish Agricultural Insurance System

has been to provide solutions for the economic as well as

social damages caused by the natural and epizootic phenomena

that affect livestock species.

All of the data provided in the previous chapters make it

possible to conclude that the System has attained a notable

level of efficiency and stability, always working within a context

where the search for excellence in the organisation has been

present in any activity or process and with the clear objective

of ensuring maximum satisfaction for all of the System's

customers, especially the end users: the agricultural and

livestock farmers. Therefore, their perception is essential to

knowing how things are getting done, establishing objectives

for improvement and working on the aspects that are less

efficient.

With this philosophy, for the last decade of this thirty-year

period, AGROSEGURO has been conducting surveys with both

agricultural and livestock farmers in order to determine their

level of satisfaction regarding various matters related to the

basic aspects, form and management of this insurance activity.

The result of this research can be considered “reasonably

satisfactory”. However, it also indicates that there is still room

for improvement on all fronts. Without a doubt, work related

to this task continues on day after day.

127

AGRICULTURAL INSURANCEEVOLUTION OF OVERALL QUALITY BY CROP

10

9

8

7

6

5

4

3

2

1

0

200220032004200520082009

CEREAL(LINES 5,118)

5.856.526.545.726.466.66

CEREAL(LINES 6)

6.276.596.396.096.766.71

GRAPES

6.426.476.606.206.756.99

CITRUSFRUITS

7.226.877.026.917.177.26

FRUITSTREES

6.476.396.416.096.686.68

INSUREDPARTY

6.396.706.576.256.836.92

LOSS

6.526.376.636.156.676.68

TOTAL

6.456.576.596.206.766.86

10

9

8

7

6

5

4

3

2

1

0

AGRICULTURAL INSURANCEEVOLUTION OF OVERALL QUALITY BY FEATURES

200220032004200520082009

2001

SERVICEPURCHASE OFINSURANCE

8.588.458.588.248.308.198.38

POLICYCOVER

6.406.326.536.076.926.95

FINANCIALAND

CONDITIONS

6.416.366.326.036.786.82

SERVICEWHEN

HANDLING LOSS8.077.707.787.567.477.888.00

APPRAISALADJUSTMENT

SERVICE5.926.026.096.276.046.876.89

PRIORINFORMATION

7.066.957.046.906.837.167.28

INDEMNITYFOR LOSS

5.775.966.106.175.746.646.89

In general, overall quality has improved 40 hundredths of a

point, attaining the best mark of the series in 2009. This

situation also applies to the results at the crop level, as well

as to the general aspects that comprise the service provided.

It is worth noting that aspects such as the policy cover,

compensation, as well as the damage appraisal and

assessment service, which traditionally have been critical

areas in the insurance sector, are the ones that have improved

the most: nearly one percentage point between the results

obtained when these studies began and today.

0

1

2

3

4

5

6

2002 2003 2004 2008 2009

LIVESTOCK INSURANCE. OVERALL QUALITY

7

8

MILKTOTAL MEAT

Data related to Bredding and Rebreeding Insurance for Cattle.

129

Unlike the agricultural sector, this sector is characterised by

a certain stability with regard to overall quality, with a turning

point in 2004 as a result of technical adjustments. The

situation re-stabilised during the following seasons and

equals the assessments obtained in the agricultural sector.

Just as with the agricultural sector, the assessments regarding

issues related to compensation, policy cover, economic

conditions, assessment and appraisal have improved, even

though the increase is not as pronounced, ranging between

10 and 20 hundredths of a point when analysing the

complete series.

0

1

2

3

4

5

6

7

8

9

10

INDEMNITY

6.596.516.166.766.83

Data related to Bredding and Rebreeding Insurance for Cattle.

20022003200420082009

PRIORINFORMATION

8.478.548.318.358.38

7.597.447.117.367.29

SERVICE DURINGPURCHASE

OF INSURANCE

6.816.726.367.016.91

FINANCIAL TERMSAND CONDITIONS

7.577.297.097.957.76

APPRAISALSERVICE COVER

7.287.056.887.497.38

8.328.368.308.438.47

SERVICE WHENHANDLING LOSS

LIVESTOCK INSURANCE. GLOBAL TRENDS IN THE QUALITY ISSUES BY SERVICE

AND PRODUCT

130

If the reader has had the patience and curiosity to read up to the final sections of this

work, they have surely already reached their own conclusions regarding the significance,

importance and usefulness that this Agricultural Insurance System signifies for Spanish

society.

In any case, and setting aside the self-satisfaction that fosters a resistance to change,

it is only fair to acknowledge, here and now, that with the maturity reached over these

thirty years of ongoing development and innovation, the Spanish Agricultural Insurance

System has attained levels of quality and strength that make it possible to face the

challenges of the future with confidence.

MADRID, June 2010

Epilogue

131

3. INSURED PRODUCTIONS

Evolution of the number of hectares and kg of agricultural production that are insured (table) ........................ 44

Evolution of the number of hectares and kg of agricultural production that are insured (graph)........................ 45

Evolution and implementation in extensive herbaceous crops ........................................................................... 46

Evolution and implementation in fruit trees ...................................................................................................... 47

Evolution and implementation in citrus fruits .................................................................................................... 49

Evolution and implementation in wine grapes .................................................................................................. 50

Evolution and implementation in vegetables..................................................................................................... 51

Evolution and implementation in olive groves ................................................................................................... 52

Evolution of the number animals insured ......................................................................................................... 53

Evolution and implementation in cattle............................................................................................................. 54

Evolution and implementation in sheep / goats................................................................................................. 56

Evolution of insured and insurable animals under C & D .................................................................................. 57

4. SUBSIDIES FOR INSURANCE PRICES

Overall ENESA contribution to agricultural insurance ........................................................................................ 61

Evolution of ENESA's annual contribution to agricultural insurance................................................................... 62

Financial contributions made by the Autonomous Communities to agricultural

insurance during the 1988-2009 period ........................................................................................................... 63

Evolution of the annual contribution from the autonomous communities to agricultural insurance ................... 64

Evolution of the annual contribution (ENESA + autonomous communities) to agricultural insurance..................65

Financial contribution made by ENESA, the Autonomous Communities and policy holders

in relation to the total cost ............................................................................................................................... 66

Contributions from the administrations to the cost of agricultural insurance..................................................... 67

Tables and Graphs

PAGE

132

5. PURCHASING AND DISTRIBUTION

Evolution of the value of accrued net premium by subsector (table).................................................................. 71

Evolution of the value of accrued net premium by subsector (graph) ................................................................ 72

Evolution of the sum insured by subsector........................................................................................................ 75

Evolution of the sum insured ............................................................................................................................ 76

Evolution of the number of policies by subsector .............................................................................................. 77

Evolution of the number of policies by type of collective policy holder .............................................................. 82

Evolution of accrued net premium value by type of collective policy holder....................................................... 83

Distribution of brokers by Autonomous Community. Purchasing of insurance. Year 2009 ................................. 85

Distribution of agents by Autonomous Community. Purchasing of insurance. Year 2009 .................................. 85

6. ASSESSMENT OF DAMAGES AND LOSS

Evolution of the expert network (table)............................................................................................................. 89

Evolution of the expert network (graph) ........................................................................................................... 90

Evolution of the expert network by sector ........................................................................................................ 90

Evolution of the number of loss claims ............................................................................................................. 93

Evolution of the total number of claims ............................................................................................................ 94

Evolution of the number of claims by sector ..................................................................................................... 94

Evolution of loss rate (table) ............................................................................................................................. 95

Evolution of loss rate (graph) ............................................................................................................................ 96

Evolution of loss rate by sector ......................................................................................................................... 96

Distribution of the cost of the claims and number of agricultural losses per risk. ............................................... 97

Map of hail risk distribution............................................................................................................................ 100

Map of distribution of frost risk affecting wine grapes.................................................................................... 102

Map of distribution of the risk of drought affecting dry farming. .................................................................... 106

Map of the distribution of wind risk ............................................................................................................... 109

PAGE

7. R&D&I IN AGRICULTURAL INSURANCE

Image from the AVHRR sensor on the NOAA satellite during the ten-day period 21/11/2009-30/11/2009...... 118

Evolution Curves for the NDVI Vegetation Index in the Region of Castuera (Badajoz), 2008 Plan.....................119

8. PROTECTION FOR INSURED PARTIES

Evolution of claim processing by customer service ......................................................................................... 124

Claim processing by the Customer Ombudsman Service (table) ..................................................................... 125

Claim processing by the Customer Ombudsman Service (graph) .................................................................... 125

Agricultural insurance. Evolution of overall quality by crop............................................................................. 127

Agricultural insurance. Evolution of overall quality by features ....................................................................... 127

Livestock insurance. Overall quality................................................................................................................ 128

Livestock insurance. Global trends in the quality issues by service and product............................................... 129

133

PAGE