Abstract
Crop insurance and in general insurance to the rural economy is an activity with several market imperfections, which have led the state to make interventions in it. This research explains the historical development of agricultural insurance and reinsurance in Mexico from the 1950s to the 1990s. It focuses on explaining how agricultural insurance and later reinsurance provided by the government began. The central argument of this paper is that the adoption of an agricultural reinsurance practice by the government was aimed at avoiding large fiscal losses and reactivating private markets. By using reinsurance, the fiscal losses were reduced. However, the government did not fully activate the rural insurance markets since it continued to intervene in the crop insurance markets with political purposes. On the other hand, the practice of reinsurance required a learning process, so it was not successful in its beginnings.
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Notes
- 1.
Between the start of the War of Independence in 1810 (it ended in 1821) and the consolidation of the republic in 1867, Mexico experienced a lengthy period of political and economic disruption.
- 2.
Among other companies, Swiss Re and Munich Re were participants in Alianza, Del Angel (2012).
- 3.
For specific sources see Swiss Re The Review, 26 August 1955, 817; 10 December 1948, 912; and December 1956, 1290; all cited in Del Angel (2012).
- 4.
In addition to Correu Toledo (1962), other contemporary studies shed light about the interest of this issue then, such as Martinez Moreno (1944), Ortega San Vicente (1958), Sandoval Cuellar (1961), Porte Petit Minivielle (1962), Portes Gil (1964), Pelayo Gómez Montiel (1968), and Velasco Oliva (1970).
- 5.
- 6.
- 7.
Article 123 of the Ley de Crédito Agrícola.
- 8.
At the start of the Anagsa operations, the study by Correu Toledo (1962), points out that this firm would allow a considerable increase in land covered, not only among the creditors of the government banks, but also between producers lacking a credit history. This because although the performance of previous years showed high operational costs, they expected that the learning and experience accumulated could lead to improvements in the operating insurance costs.
- 9.
Ley del Seguro Agrícola Integral y Ganadero, Law Proposal to the Mexican Congress, 1961.
- 10.
Files F04357 Archivos Económicos, Secretaría de Hacienda.
- 11.
In 1981, the director of Anagsa declared in a press conference that, independently of the regular insurance by the company, the coverage of the crops contemplated in the SAM would be expanded to support this program. El Nacional, 4 July 1981, Files F04357 Archivos Económicos, Secretaría de Hacienda.
- 12.
Files F04357 Archivos Económicos, Secretaría de Hacienda: 21 mayo 1984, 22 noviembre 1984, 5 febrero 1985, 12 noviembre 1987, 18 noviembre 1987, 22 diciembre 1987.
- 13.
Ibid.
- 14.
Interview to Salvador Mayoral, September 1, 2007.
- 15.
See also Files F04357 Archivos Económicos, Secretaría de Hacienda: 21 mayo 1984, 22 noviembre 1984, 5 febrero 1985, 12 noviembre 1987, 18 noviembre 1987, 22 diciembre 1987.
- 16.
Interview to Salvador Mayoral, September 1, 2007.
- 17.
Files F04357 Archivos Económicos, Secretaría de Hacienda y Crédito Público, Excélsior, 15 July 1989.
- 18.
- 19.
Also interview with Salvador Mayoral, September 1, 2007.
- 20.
Warman (2001), p. 160.
- 21.
Interview to Salvador Mayoral, September 1, 2007.
- 22.
Tellez was then Deputy Minister at the Ministry of Agriculture.
- 23.
At the time of the establishment, of the 304 million of capital, 204 would be paid, and 100 million would remain to be paid. Agroasemex (nd).
- 24.
The shareholders were financial organizations of the federal government: FIRA, Nafin, Banobras, Bancomext, and the federal government itself. At the beginning also a state-owned insurer, Asemex, was a shareholder, when Asemex was privatized in 1992, sold its stock to the federal government.
- 25.
Interview to Salvador Mayoral, September 1, 2007.
- 26.
A relevant fact was that at the start of operations there was a problem of inertia: Banrural’s portfolio was expected to be insured, as the old Anagsa used to do. This would have guaranteed the expansion of the land coverage as in other times. However, since the firm aimed to follow actuarial criteria for insurance, the technical filters only allowed insuring 400 thousand hectares in that first operation. Cleaning the Banrural portfolio for insurance led to both institutions ceasing operational relations, and hence breaking the old scheme in a definitive manner. Interview to Salvador Mayoral, September 1, 2007.
- 27.
Interview to Salvador Mayoral, September 1, 2007.
- 28.
The financial situation was published in the government gazette, Diario Oficial, 17 August 1999.
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Del Angel, G.A. (2021). Government Intervention in Rural Insurance and Reinsurance Markets in Mexico: 1940–2000. In: Caruana de las Cagigas, L., Straus, A. (eds) Role of Reinsurance in the World. Palgrave Studies in Economic History. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-74002-3_10
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