ORGANIZATIONAL AND METHODICAL BASES OF THE MARKET FORMATION OF AGRARIAN INSURANCE WITH STATE SUPPORT

Abstract

Purpose. The aim of the article is the substantiation of the essence of the market of agricultural insurance, the determination of the basic organizational and methodical principles of its formation, the structural characterization of its structural elements and the assessment of the effectiveness of the functioning of the existing agricultural insurance market in Ukraine, as well as the determination of the directions of improvement of the agricultural insurance process, in particular the formation of the market of agrarian insurance with state support. Methodology of research. General scientific and special methods of research are used in the process of research, in particular methods: dialectics and scientific abstraction – in determining the essence of the market of agrarian insurance with state support; analysis and synthesis – in determining the structural elements of the construction of financial and insurance architectural engineering of an agrarian enterprise. When creating a methodological algorithm for constructing financial and insurance architectures of agrarian enterprises, a methodical approach is used which takes into account the diversity of financial and managerial processes in their interconnection and interdependence in order to ensure effective insurance in the agrarian sector. Findings. It has been determined that agricultural insurance has a unique feature, which is that it is viable in the long run, usually only if the government provides financial support to the system. In this case, subsidies should be applied in such a way that the system is not distorted. It has been established that the risks are highly correlated (systemic) in agriculture and therefore large losses can be incurred for a large number of subjects of the agrarian market at the same time. It is substantiated that state participation in support of agricultural risk insurance is dictated, on the one hand, by the uniqueness of agricultural risks, and, on the other hand, the need to make financial assistance to the state of agriculture targeted. It is revealed that the features of agriculture, which determine the expediency of state participation in insurance of agro-risks, are associated with difficult weather conditions and other risk factors of food production. Originality. Defined insurance programs that are able to stimulate farmers to introduce more sophisticated production processes, which promotes credibility of lenders, and hence the expansion of producers' access to credit, and generally encourages the introduction of new technologies, can serve as a platform for unifying partnership agreements between public authorities and the private sector in the field of insurance and reinsurance, which prompts implementation of other risk management initiatives in agriculture. Practical value. It is substantiated that agricultural insurance with state support is considered a positive, technically feasible mechanism for stabilizing production and incomes of agricultural producers, encouraging them to proactively manage their risks, promoting the introduction of the best technologies for managing the economy and more efficient targeting of budget funds compared to non-system catastrophic payments. It is found that agrarian insurance occupies a central place in the economic system of countries based on market principles, providing, on the one hand, reliable insurance protection against risks of subjects of market relations, insurance protection of property interests of members of society and the needs of the economy in investment resources – from the other side. In addition, insurance is an integral part of the economic relations of agricultural enterprises of different forms of ownership. It has been established that privately owned insurance and reinsurance companies will not be able to allocate sufficient financial resources to the full extent without state participation to fully assume obligations related to systemic risks in agriculture. Moreover, without government support, when insurance payments in some years will be extremely high due to natural disasters, this state of affairs will discourage private companies from insuring agricultural risks, or will lead to such escalation of tariffs that insurance will become inaccessible to agricultural producers.