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INSURANCE MONEY WILL HELP FEED N. KOREANS

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North Korea took out insurance policies against crop damage from natural disasters and the money collected from Western companies will enable it to buy rice for its increasingly hungry people, South Korean officials said Saturday.

British and German insurance companies paid claims of $130 million in January for bad crop yields caused by cold weather in 1994, the officials said, speaking on condition of anonymity.North Korea also stands to collect a large sum of insurance money for last summer's floods, which devastated large stretches of farmland and left hundreds of thousands of people homeless, the officials said.

The United States, Japan and South Korea knew about the insurance money paid in January, a senior Foreign Ministry official said. The money will reportedly enable North Korea to buy 420,000 tons of rice.

The reclusive Communist country has reportedly suffered chronic food shortages for years due to cold weather and mismanagement. Flooding last summer swept away entire villages.

In some parts of the country people have been forced to eat grass and roots to survive.

The United Nations last week appealed for $43 million in international contributions for North Korea. The United States agreed to contribute $6 million.

While South Korea has also donated several million dollars in food relief, it says its neighbor is exaggerating its needs.

Seoul has said it will not provide major aid until its rival improves ties and joins talks to formally end the Korean War, which concluded with only an armistice.