AXA Insurance Encourages Premium Subsidies to Advance Agricultural Insurance

AXA Insurance (Doc. Ist)

Printable.biz.id – AXA Insurance Indonesia stated that the development of agricultural insurance, particularly parametric insurance, still faces major challenges due to the high premiums that farmers must pay.

Therefore, they believe that premium subsidies are essential to make this product more accessible to farmers.

Rudy Laoh, Head of Retail Claim, Product Proposition, and Green Business at AXA Insurance Indonesia, explained that without subsidies, farmers would find it difficult to purchase insurance policies due to the high costs.

"We need stakeholders to step in because farmers need premium subsidies for agricultural insurance. Parametric insurance is not cheap. So without premium subsidies, it would be hard for farmers to afford insurance policies," he said on Friday (April 4).

According to Rudy, premium subsidies can make agricultural insurance programs more sustainable and truly beneficial for farmers. “From our experience, farmers only start showing interest in insurance when subsidies are available,” he added.

Rudy also noted that the outlook for agricultural insurance is quite promising, as Indonesia is an agrarian country.

AXA Insurance is ready to collaborate with the government and the General Insurance Association of Indonesia (AAUI) to develop this product. In fact, they have been offering agricultural insurance since 2018.

As for parametric insurance specifically, AXA has conducted trials in two regions: Karawang and South Sulawesi. By the end of 2024, this product had generated premiums amounting to IDR 1 billion.

However, Rudy acknowledged that there is still work to be done, particularly in designing an effective mechanism so that the insurance product can truly be used by farmers.

“So now it’s just the end users (farmers) we’re waiting on. We’re still awaiting news on the mechanism,” he said.

On the other hand, the General Insurance Association of Indonesia (AAUI) has launched the Agricultural Insurance Development Roadmap 2025–2030.

AAUI Chairman Budi Herawan stated that the insurance industry is highly interested in entering the agricultural sector due to its vast potential, especially since Indonesia has not yet achieved food self-sufficiency.

According to Budi, agricultural insurance could be one of the means to support national food security.

He also mentioned that the insurance industry plans to fully implement agricultural insurance starting from the second half of 2025, using a parametric scheme as the foundation for its implementation.