Agricultural insurance shelters farmers in grain belts (4)

The State Council, China's Cabinet, announced new regulations on agricultural insurance last Friday, pledging to continue subsidizing insurance premiums and supporting insurers with tax benefits.

According to the regulation, which will take effect from March 2013, the state will establish a mechanism -- with funding support from the government -- to mitigate risks insurers face in major natural disasters.

Insurance company executives in Heilongjiang said at a previous press briefing that payments for damage from hail, an outbreak of pests and a powerful typhoon have seriously dampened their companies' profit perspectives this year.

On most occasions, losses can be absorbed by the insurance companies themselves, said Li Dan, an associate professor in insurance at Northeast Agriculture University.

However, catastrophic losses resulting from worst-case scenarios may overwhelm their financial strength, Li added.

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