Regulation Mechanism Of Systemic Risk In Agricultural Insurance

Abstract

This paper deals with studies into possible stabilization of the Russian system of agricultural insurance in conditions of increased systemic risk. Presence of a systemic risk in activities of the national agricultural insurance has been confirmed. Risk-contributing factors in activities of participants of the Russian agricultural insurance are identified and grouped by cause and source of the systemic risk. In operational conditions of the Russian agricultural insurance system, the most significant source of the systemic risk is farmer, then the state, while the agricultural insurance underwriter is only third in significance. A mechanism is proposed for regulation of the systemic risk in the Russian agricultural insurance, providing, identification and analysis of systemic risk sources, causes and factors, development and implementation of preventive measures aimed at reducing the systemic risk on the basis of public-private partnership. The mechanism recommended by the authors is based on employing a mathematical apparatus that includes Ishikawa charts, STEEPL analysis, hierarchy analysis method, Pareto principle (20/80 rule) and a software solution for priority evaluation of alternative preventive risk aimed at risk localization. A differentiated list of 8 alternatives is given that allows localizing the conflict of interests in the subsidized agricultural insurance in Russia. Balanced development of the agricultural insurance in Russia is justified based on using advantages of both combined and mixed models. It has been shown that to use these models, the Russian agricultural insurance shall provide real public-private partnership allowing leveling a negative influence coming from sources of systemic risks.