The insurer shall underwrite the risk of agricultural insurance by means of the risk spreading and management mechanism established by the competent authority.
The risk spreading and management mechanism specified in the preceding paragraph shall be administered by the Agricultural Insurance Fund established by the competent authority; the risk transferred by the insurer shall be assumed by the foregoing fund, ceded to domestic or foreign reinsurers or handled in the manner prescribed by the competent authority.
With respect to the risk spreading and management mechanism specified in the preceding two paragraphs, the competent authority shall, in consultation with the Financial Supervisory Commission, prescribe regulations governing the risk assumption limit or rate, insured amount, insurance premium rate, provisions for various reserve funds and other matters to be complied with.

The Agricultural Insurance Fund shall conduct the following activities:
(1) Matters on re-insurance, risk assumption and risk spreading of agricultural insurance
(2) Matters on fund income and fund utilization
(3) Establishment and maintenance of the agricultural insurance information system
(4) Education and training of loss adjustment personnel and establishment and management of human resource database; they may handle loss adjustment matters upon appointment by the insurer
(5) Education and publicity of agricultural insurance
(6) Establishment of channels for assistance, consultation and complaint for the proposer and the insured of the agricultural insurance
(7) Promotion of other matters related to agricultural insurance
With respect to the Agricultural Insurance Fund, the charter of endowment, fund utilization and other matters to be complied with shall be prescribed by the competent authority.

The sources of funds for the Agricultural Insurance Fund shall be as follows:
(1) Endowment by the government
(2) Reinsurance premium income received from agricultural insurance products
(3) Interest and returns on capital
(4) Income from donations
(5) Obtaining loans or financing from financial institutions
(6) Other sources of income
With respect to the endowment by the government specified in Sub-paragraph 1 of the preceding paragraph, the competent authority shall allocate budgets up to NT$10,000,000,000; thereafter, it shall continue to allocate and budget for the foregoing fund based on the required underwriting capacity and the extent of loss.