China unveiled its "No.1 central document" for 2022 "Opinions of the Central Committee of the CPC and the State Council on Fulfilling the Key Work of Comprehensively Promoting Rural Revitalization in 2022". It clarified two bottom lines of guaranteeing China's grain security and ensuring no large-scale return to poverty to accelerate rural revitalization. Against this background, Chinese Academy of Financial Inclusion at Renmin University of China (CAFI) held "From Digital Agricultural Insurance to Green Rural Revitalization – Green Agricultural Insurance Symposium" virtually on March 23rd. The symposium aimed at putting forward practical policy recommendations for rural revitalization by exploring issues such as enhancing the quality and efficiency of agricultural and rural insurance by transforming and upgrading it, the path to green rural development, and further integration of inclusive finance and green finance.

The participants of the symposium include Yanli Zhou, former Vice Chairman of China Banking and Insurance Regulatory Commission (CBIRC), Yang Li, Chairman of National Institution for Finance & Development (NIFD), Xuehao Hu, Director of the State-owned Financial Capital Operation and Assessment Center and First-level Inspector of the Department of Finance, Ministry of Finance, Duoguang Bei, President of CAFI, Xiugen Mo, Vice President of CAFI, Jun Ma, President of the Institute of Finance and Sustainability, Wenjun Long, Director of the Social and Cultural Research Office, the Research Center for Rural Economy, Ministry of Agriculture and Rural Affairs (MARA), and experts and representatives from National Development and Reform Commission (NDRC), the International Finance Corporation (IFC) of the World Bank Group, Lanzhou Municipal Bureau of Agricultural and Rural Affairs, Huafeng Meteorological Media Group, and Willis Towers Watson, and other departments and institutions.

Yanli Zhou delivered a speech on "Green Agricultural Insurance for China's Rural Revitalization Strategy". He said that in 2022, the key year for the rural revitalization strategy, it is necessary to integrate the high-quality development of agricultural insurance with the rural revitalization strategy. From crop insurance, planting income insurance, to senior citizen health insurance in rural areas, the insurance of "san nong" (the agricultural sector, farmers, and rural areas) has a fundamental role in promoting rural revitalization.

In the speech, Yang Li suggested that agricultural and rural insurance needs reform by activating innovative mechanisms and establishing professional credit rating agencies for agricultural insurance.

Daniel Cowen, head of Financial Services, British Embassy in Beijing, delivered an opening remark. In his speech, he recognized the achievements and significance of the long-standing cooperation between the British Embassy and various stakeholders in green finance and agricultural insurance and expressed his expectations for future cooperation.

In the symposium, Xiugen Mo, on behalf of the research team of CAFI, released Report on Developing Weather Index Insurance for Agriculture and Optimiz Rural Financial Service System (hereinafter referred to as the Report). The Report, focusing on Weather Index Insurance (WII), combines the data analysis of pilot WII products and surveys of farmers households, and analyzes the insurance and financial health of farmers and the supply and demand of agricultural insurance and WII for Agriculture, etc. The Report concludes that WII plays a crucial role in the mitigation and prevention of disasters in agricultural production and is an effective supplement to the rural financial service system, with advantages of preventing moral hazard, reducing adverse selection, and lowering insurance undertakings. However, CAFI researchers also found that despite the advantages and high potential demand, only 35% of the farmers surveyed have heard of WII products. Moreover, due to their lack of knowledge of the products, farmers are generally reluctant to buy WII products; for example, "uncertainty of rates" (38%) and “have not suffered from production reduction due to meteorological disasters" (37%) are the top two reasons.

In response to the problems, CAFI put forward suggestions in the Report to promote WII products in rural China. First, to innovate the insurance business model based on the existing financial products. Second, to increase the categories of pilot products to expand the scale. Third, to strengthen the capacity building of service departments in rural areas and improve the market’s understanding of WII for Agriculture.

Based on the Report with WII cases and beyond, Randall Riopelle, chief representative of IFC China, Korea, and Mongolia, said climate change is a serious threat to poverty reduction and shared prosperity. In order to promote the co-development of economy, environment, and inclusive society, the World Bank Group has put forward a new strategy known as the Green, Resilient, and Inclusive Development (GRID) approach. The IFC Digital WII program has provided some 25,000 farmers with the coverage of more than $1 billion worth of cash crops, thereby reducing the risks of returning to poverty in rural areas due to climate disasters. This case demonstrates the benefits of this work. We hope that more partners will also adopt a green, resilient, and inclusive development approach.

Jun Ma believes that to make inclusive finance greener and make green finance more accessible to micro and small enterprises (MSEs), san nong, and other areas, it is necessary to work on the following aspects. First, to gradually apply green finance standards to microfinance. Second, to establish an ESG disclosure system for MSEs, agriculture, and green consumer finance. Third, to develop financial products for micro, small, agricultural, and consumer sectors. Fourth, to provide financial instruments such as collective bonds for green small and medium-sized enterprises (SMEs).

In the concluding remarks, Duoguang Bei said that insurance is very important in building a financial inclusion ecosystem and protecting micro businesses and vulnerable groups, which include small holders, small rural businesses (such as small workshops, vendors, and agritainment, etc.), and rural e-merchants. They are vulnerable to risks and need to use various types of insurance for risk and/or loss sharing. Therefore, multi-party cooperation is needed to develop more inclusive insurance products that meet the development needs of a digital, modern, and low-carbon and green countryside, as well as the needs of both supply and demand sides.

THE END