The Importance of Agricultural Insurance in Panama

The Importance of Agricultural Insurance in Panama

Central America experienced major changes as a result of its inclusion into the world economy, hence it becomes imperative for the countries of the region become more competitive and Panama does not escape this reality.

Panamanian Agricultural Sector is vulnerable to risks of unexpected and uncontrollable character, for this reason it is necessary to continue efforts to improve services aimed at this sector.

It is essential to develop innovative instruments for increasing competitiveness, involving governance and achieve more opportunities to provide and to private management which is part of the key.

Hence the importance of further developing for Agricultural insurance in
Panama, which contribute to the positive approach of this regional circumstances.

Panama offers a positive to develop a market that protects agricultural investment landscape. It stresses that the best opportunities are given in insurance systems designed with the participation of all stakeholders: political levels, state institutions, insurance companies, marketing and generating information; in combination with all these farmers as reported other studies.

It should be noted that the Inter-American Development Bank (IDB), proposed that governments should create policies to public goods and services and incentives and direct market interventions by the public sector, to enable the development of the insurance market agricultural.

Why the Importance of Agricultural Insurance in Panama? For the following reasons:

1. Security for Business Agro.
2. Ensures greater stability of income.
3. Encourages investment in agriculture.
4. Encourage further development in agribusinesses.

The Insurable risks in the Agricultural Industry in Panama are the following:

1. Labor.
2. Legal.
3. Market.
4. Production.

5. Risks of a Natural origin are the following:

a) Flooding.
b) Excess moisture.
c) Strong winds.
d) Drought.
e) Pests.
f) Diseases and others.

These conditions emphasize the risks and thus jeopardize the continued development of agricultural activity. Water excess, defect or poor distribution of rainfall, is the main cause in Panama in about a 75% of economic damages arising as a result of drought is concentrated in the agricultural sector.

For this reason the Government of Panama created by Law No. 34 of 29th of April,  1996., that The Subrogated Law No. 68 of the year 1975, The Institute of Agricultural Insurance; offering a wide range of insurance and bonds the most vulnerable sector of Panama, in order to offset up to 90% for casualty losses caused by different climatic and production factors, providing reassurance and security in their investments this does not mean there is no private insurers who are interested in Panamanian agriculture, with Panama and Nicaragua the first countries in Central American that have a mixed system of Agricultural Insurance.

Producers claim the lack of adequate policies for this particular sector, but being a safe that requires a large volume of production to be profitable, insurers are unattractive in business.

For entrepreneurs in The Agricultural Sector, the State, through the Agricultural Insurance Institute (ISA), should assume the role of insurer sector activities, replacing private companies, who do not find attractive in the business of granting policies as specialized as required in agriculture.

The first steps have already been given, we need the international efforts to systematize experiences, establish indicators, update information and contribute to the process of decision making actors who depend on and promote these rural businesses for the better development and security of The Agricultural Sector of Panama, reiterating once again the importance of The Agricultural Insurance in the country.

Luis Enrique Navas Díaz