Development of Crop Insurance and Its Factors in Lithuania

Abstract

Every activity or business experiences successful and unsuccessful periods, also faces some risks. In economics and business practice, more than 220 risk factors are identified. Due to climate change, more and more natural disasters are occurring in the world, and agricultural businesses are heavily dependent on them. Scientists have found that the highest loss of crop yields is due to adverse natural phenomena. In agriculture, one of the most popular production risk management tools around the world is crop insurance. Research aim: to analyse crop insurance, as a mean of controlling production risks, development results in Lithuania as well as to identify and evaluate its factors. After data (2008–2016) analysis of crop insurance development in Lithuania, it can be assumed that the positive development of crop insurance exists, and even though crop insurance is not evenly divided throughout the country, the amount of policyholders, area of insured crops and its share, the insured area by one person and insurance package supply is increasing, moreover country’s and EU financial support for compensations of crop insurance contributions from losses caused by adverse climatic phenomena is ensured. Survey shows that the major factors which restrict crop insurance are bad economic situation, financial inefficiency, not satisfying conditions for crop insurance and loss management system, low reimbursement rates for insurance and excessive bureaucracy. Researchers indicate these fostering factors for crop insurance: reduction of insurance contributions, higher contributions for compensations, more flexible insurance conditions, simpler procedures of reimbursement of contributions, better financial situation.