The State-Subsidized Agricultural Insurance Program in Georgia: Results and Future Prospects

Agriculture in Georgia represents one of the most risk-sensitive economic sectors, as its development is highly dependent on natural and climatic conditions. In the context of climate change and the increasing frequency of natural disasters, the role of agricultural insurance as an important instrument for managing agricultural risks and ensuring farmers’ financial stability has become increasingly significant. This paper examines the current state of the agricultural insurance system in Georgia, its development dynamics, major challenges, and future prospects.
The study analyzes the significance of the state-subsidized agricultural insurance program introduced in 2014, its impact on increasing farmers’ participation, and the changes implemented throughout the development of the system. Particular attention is paid to the challenges of low insurance coverage, the uneven geographical distribution of insured agricultural land, the risk of adverse selection, insufficient development of meteorological infrastructure, and the necessity of implementing risk-based premium rating systems.
The findings demonstrate that despite the progress achieved through state support, the level of agricultural insurance penetration in Georgia remains limited. The share of insured agricultural land constitutes only a small proportion of the total cultivated area, which restricts risk diversification and increases challenges related to the financial sustainability of the insurance system. Furthermore, the high concentration of insured plots in high-risk regions indicates the presence of adverse selection, as insurance participation is primarily driven by farmers facing a higher probability of losses.
The paper emphasizes that the further development of agricultural insurance in Georgia should be based on data-driven approaches, the expansion of meteorological observation networks, the application of econometric and actuarial models, the improvement of risk-based pricing systems, and the integration of modern digital technologies. These measures will contribute to a more balanced insurance portfolio, strengthen farmers’ protection mechanisms, and ensure the long-term financial sustainability of the agricultural insurance system.

Agricultural Insurance; Agricultural Risks; State-Subsidized Insurance Program; Climate Risks; Adverse Selection; Insurance Coverage; Meteorological Infrastructure; Risk-Based Pricing; Financial Sustainability.

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