Strengthening the "Safety Net" for Stable Hog Industry Production and Supply; Scientific Pricing Mechanism for Hog Insurance Set to Break Through

Hubei Jinlin Original Breeding Livestock Co., Ltd. Farm Guo Chenkai Illustration

“Strengthening the comprehensive regulation of hog production capacity” has been incorporated into the “14th Five-Year Plan” outline. The State Administration for Financial Regulation, Ministry of Finance, and Ministry of Agriculture and Rural Affairs recently jointly issued the “Notice on Strengthening Cooperation to Promote High-Quality Development of Hog Insurance” (hereinafter referred to as the “Notice”), aiming to improve the accuracy of underwriting and claims for hog insurance, enhance the quality and efficiency of hog insurance, and serve as a “safety net” for stable hog production and supply.

Several professionals in the hog insurance industry told Shanghai Securities Journal that hog insurance is a necessary保障 product supported by central and local government subsidies, playing an irreplaceable role in ensuring hog production and food safety. However, hog insurance currently faces multiple challenges in operation, and it is urgent to improve pricing science and enrich product innovation under the support of the “Notice” to better meet the emerging risk protection needs of the hog industry.

Breaking the Scientific Pricing Mechanism

Hog insurance is the largest category of agricultural insurance. According to the State Administration for Financial Regulation, by 2025, the premium scale for hog insurance is expected to reach about 33 billion yuan, providing risk coverage of 631.3 billion yuan, adequately meeting the保障 needs of over 700 million hogs in China.

A prominent issue in the development of hog insurance is the low accuracy of underwriting and claims. Xia Xuedong, General Manager of the Agricultural Insurance Department at PICC Property and Casualty, told Shanghai Securities Journal that hogs are animals with multiple births per pregnancy, similar in appearance and large in number, making precise differentiation difficult. For epidemic prevention reasons, breeding enterprises do not allow insurance inspectors into their facilities, making counting difficult, which leads to low underwriting and claims accuracy.

High payout risks caused by diseases and price fluctuations remain unresolved. This year, swine fever outbreaks have occurred in Japan, Spain, and other regions. Additionally, domestic hog market prices have been declining continuously, causing losses in the breeding industry. Zhao Le, Assistant General Manager of Anhua Agricultural Insurance, told Shanghai Securities Journal that insurance companies face significant pressure from the high payout risks associated with集中 outbreaks of diseases and sharp market fluctuations.

Lack of market-based pricing mechanisms. Xia Xuedong explained that currently, product pricing is mainly led by local governments, with insufficient market-based pricing, resulting in低费率 levels that are not dynamically adjusted or optimized, which does not match the high-risk characteristics.

Several hog insurance professionals told Shanghai Securities Journal that currently, the premium rate for breeding sows is mainly around 6% to 7%, and for fattening pigs around 4% to 6%, with some regional differences but not significant.

The “Notice” has clarified the direction of reform: localities should establish dynamic adjustment mechanisms for hog insurance premiums, reasonably determine premiums based on operational conditions, disease incidence, etc. Regular adjustments should be made for insurance rates on breeding sows and fattening pigs, with adjustment cycles generally not exceeding three years, to enhance the sustainability of the insurance products.

Zhao Le said this will promote more accurate pricing of hog insurance reflecting local risk levels, helping to improve risk保障 levels to match production costs, and providing a制度基础 for insurance companies to achieve long-term, stable, and sustainable业务.

Several insurance companies told Shanghai Securities Journal that they will strengthen communication with local government departments, regularly analyze local hog insurance operations, and based on data such as claims payouts, disease incidence, and production costs, promote scientific adjustments to hog insurance pricing, helping to build a多方可持续性的新型定价机制.

Transforming to Full Industry Chain Protection

As AI breeding, genetic breeding, and other new technologies deepen their impact on the hog industry, the trend toward规模化 and集约化 is evident, bringing new challenges to hog insurance operations.

Xia Xuedong analyzed that in the future, the risk of hog死亡 is expected to decline, but market price fluctuations will persist long-term. Risks in the产业链环节 of production, circulation, transportation, and sales will continue to generate保障需求.

Zhao Le stated that currently, hog insurance mainly covers risks such as疾病, natural disasters, accidents, and government culling that lead to hog死亡. Some regions are试点价格险 and收入险 to address price fluctuation risks. However, risks like decline in生产性能, rising feed costs, and risks in transportation and slaughter are still largely未被保障.

Product innovation is key to breaking the deadlock. Hog insurance needs to shift from covering死亡 to covering价格,收入, and全产业链. Zhao Le pointed out that market risks caused by price and income fluctuations have broad影响面, making it difficult for insurance companies to承担 alone. It requires多方参与, including government, breeding enterprises, and insurance companies, through财政,金融, and产业政策的“组合拳”, to jointly建立长效风险分散机制.

The “Notice” also要求加强跨部门数据共享核验。各地应实现生猪生产养殖、检疫、无害化处理等农业数据与承保理赔等保险类数据的多重交叉核验，提高生猪保险承保理赔的精准性。

Long Ge, Deputy Director of the Center for Innovation and Risk Management at the University of International Business and Economics, told Shanghai Securities Journal that integrating data across parties, allowing insurance companies, harmless processing plants, and breeding enterprises to match data, is essential for achieving精准承保理赔.

The risk保障需求 of breeding enterprises is expected to be better met. Xia Xuedong said that with comprehensive data support, the scientificity of hog insurance pricing is likely to improve, giving insurance companies more space to innovate products and better meet the risk保障 needs of breeding enterprises. Going forward, PICC Property and Casualty will focus more on personalized保障 for大型养殖企业, developing专属产品 and产业链综合保障产品 to better meet their overall保障需求.