HARBIN - China's fledgling agricultural insurance sector has buffered farmers against greater losses after hail, pest outbreaks and a massive typhoon hit China's breadbasket, the northeastern provinces of Heilongjiang and Jilin, a local official said Thursday.

"Agricultural insurance has proven instrumental in transferring risks and stabilizing farmers' income," said Liu Feng, director of the Heilongjiang Provincial Insurance Regulatory Bureau.

Zhang Chuanxin, a farmer in Heilongjiang province, received 3,747 yuan ($595) from his insurer for hundreds of cornstalks crushed by Typhoon Bolaven.

"It's not big money, but better than nothing," Zhang said as he lined up with about 600 farmers in the school playground of Xinmin village to claim their compensation.

In Jilin province, Anhua Agricultural Insurance, a national crop insurer, said it has offered 192 million yuan in compensation to 451,900 families.

Agricultural insurance policyholders have mushroomed in recent years as China rolled out subsidy packages for the agricultural sector, which involves half of China's population.

Agricultural insurance, serving as a safety net, increases farmers' ability to manage risks and enables them to devote more resources toward higher-quality agricultural inputs, including farming equipment and seeds.

The Chinese government now shoulders 80 percent of agricultural insurance premiums. In Heilongjiang, every yuan paid by a farmer is subsidized by 0.75 yuan from the county government, 1.25 yuan from the provincial government and 2 yuan from the central government.

From 2007 to 2011, China's central government budget spent 26.4 billion yuan on agricultural insurance subsidies, according to the China Insurance Regulatory Commission.

"These subsidies have made agricultural insurance premiums affordable for a large group of farmers and have led to rapid growth in the Chinese agricultural insurance market," according to a report by Swiss Reinsurance Company (Swiss Re), one of the world's largest reinsurers.

For instance, agricultural insurance in Heilongjiang now covers almost half of the farmland in the province, but two years ago, only about 30 percent was insured, according to Heilongjiang Provincial Insurance Regulatory Bureau.

The Swiss Re report commended China's efforts to develop a robust agricultural insurance industry, saying the country's use of agricultural insurance as an incentive for expanding production sets a good example for other emerging markets that lack such a framework.

China is the second-largest agricultural insurance market in the world after the United States, according to a report by the Food and Agriculture Organization of the United Nations in December 2011.

However, Chinese farmers say the money paid by insurance companies is still not enough to offset their losses. Usually, insurance compensates only a portion of farmers' losses, like money spent on seeds and fertilizers.

"Compared with what I can get in a smooth harvest, the compensation is far from enough," said Zhang, the farmer.

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.