How does it work?
Since competition for land becomes more acute every year in Ukraine, agro-companies are looking for new ways to retain their “own” land parcel owners and replenish the land bank. The price race often leads to unreasonable overestimation of rent and “overheating” of the market. However, now agricultural holdings have in their arsenal a less painful for the industry tool for “pumping” loyalty of villagers – medical insurance for land parcel owners.
Agroholdings buy health insurance for landowners they work with. Land parcel owners may use this product within a year. It involves certain services: coverage of medical expenses for outpatient care, inpatient treatment, purchase of medicines, etc.
The mechanism of working with a new product is simple. A land parcel owner receives a card from insurance company. If they have health problems, they turn to a local paramedic to get help and medication on the spot. In another case, paramedic may send the patient to the pharmacy or to the district clinic for examination. If necessary, the provider can also offer inpatient treatment to the patient. All of these costs are fully compensated.
Will this tool provoke an unfair competition for the land?
When medical insurance is offered, this is perceived as an additional benefit. Only an agroholding that buys this insurance knows its real value. So there should be no unfair competition. Medical insurance does not undermine the price policy that is developing in the agricultural sector of Ukraine. On the contrary, this allows to avoid price wars between market participants.
Who is it more profitable for: a parcel owner or a holding?
There are health insurance products that are available on the market on an individual basis. That is, a person who needs medical insurance can buy it, but at a more expensive price. As a rule, people who have serious health problems are insured individually. Of course, these circumstances also taken into account by insurance companies in their pricing policy. For land parcel owners, the benefit lies in the fact that on an individual basis the insurance costs more than the price paid by an agricultural holding for this product.
What is the social impact of the instrument?
In Ukraine the health situation is complex, especially for people from rural areas. The villagers often have very limited access to medical services, specialists, medicines and lower incomes compared to urban residents. By introducing health insurance for land parcel owners, agroholdings have a double positive impact:
– develop medical infrastructure in villages;
– provide land parcel owners with resources that enable them to receive appropriate medical care.
Most likely without medical insurance from an agroholding, people would simply not be able to afford such treatment.
What are the additional benefits for an agroholding?
Often land parcel owners address the representatives of an agroholding or a farmer for help on various issues, in particular, for treatment. In addition to the issue of financial expenses to solve these problems, one has to look for time and involve people.
If a company buys insurance for its parcel owners, it immediately solves the priority issue – the health of parcel owners. In addition, it strengthens relations between the owners of land plots and farmers. Moreover, when buying an insurance product for parcel owners they transfer the process of its administration to the insurance company.
All conditions for all land parcel owners are equal, the contracts clearly state which services are covered by an insurance company and which are not, therefore this system is understandable and transparent.
Another important factor. When the land market opens, parcel owners will certainly give preference to those companies that have taken care of them.
How to implement the program in practice?
To start a similar project, support is required from district state administrations, the holding itself and rural paramedics. EUROP Insurance Brokers as a broker is actively involved in the implementation of health insurance for parcel owners. At the initial stage, it actively works with the insurance company, meets with rural paramedics, representatives of district state administrations. It also communicates with land parcel owners, which is a very important aspect for such a project. Representatives of EUROP Insurance Brokers explain how this product works, how it can be used.
If subsequently there are problems with the introduction of insurance product, the broker company takes an active part in its solving. It is very important for EUROP Insurance Brokers that their clients – agricultural holdings and their land parcel owners – receive the maximum benefit from the work of this program.
We already have positive feedback from customers and continue to work actively in this direction. For example, last autumn we implemented a program with one agroholding. We started with the pilot, but now the project is significantly expanding. At the same time, the share of land parcel owners who actively use health insurance is growing rapidly.
Today, this product is used only by a few agricultural holdings, but demand is growing due to good results demonstrated by these programs.