In its latest commentary, Morningstar DBRS highlighted that Andalusia, which it rates A (high) with a Stable trend, has been affected by several weeks of extreme weather driven by Storms Leonardo and Marta. According to the agency, the storms have delivered record rainfall, widespread flooding, landslides and evacuations, disrupting economic activity across the region and severely affecting the agricultural sector.

Morningstar DBRS noted that extensive farmland has been submerged and crops destroyed due to continuous rainfall. Citing information from the Andalusian Regional Government and COAG, one of Spain’s main farmers’ unions, the agency reported that around 20% of Andalusia’s total agricultural output has already been impacted.

Winter vegetables, citrus orchards and vineyards are among the most affected, with potential losses estimated at more than EUR 3 billion. In addition, Morningstar DBRS expects approximately EUR 100 million in further damage to property, vehicles and individuals.

Morningstar DBRS explained that Spain’s Seguro Agrario Combinado (SAC), created in 1980, operates as a public-private co-insurance mechanism under which multiple private insurers jointly underwrite agricultural and livestock risks. The agency emphasised that coverage is standardised but calibrated to reflect crop characteristics and geographic exposure, with premiums determined by underlying risk profiles. It also pointed out that both national and regional governments provide subsidies to ensure the system remains accessible to producers.

According to Morningstar DBRS, the state-owned Consorcio de Compensación de Seguros plays a pivotal role within this framework. The CCS assumes a fixed 10% quota share of every SAC policy and provides excess-of-loss reinsurance protection to the private co-insurers, thereby strengthening the system’s capacity to withstand catastrophic events. The agency further noted that Agroseguro, the entity coordinating insurers within the SAC structure, was primarily owned at the end of 2024 by Caser SA (21%), Mapfre SA (18%), Agropelayo SA (14%), Seguros Generales Rural SA (13%) and Allianz SA (8%).

“Insured losses will be likely absorbed either by the SAC or the Consorcio de Compensación de Seguros (CCS),” added Mario De Cicco, Vice President, Global Insurance and Pension Ratings at Morningstar DBRS. “As a result, the impact on private insurers will be negligible in our view.”

Morningstar DBRS reported that total claims paid by Agroseguro reached EUR 804 million in 2025, representing a 13% increase from the previous year and marking the second-highest annual level in the past decade. The agency observed that only 2023 recorded higher losses, at EUR 1,241 million, largely due to severe drought conditions. In Andalusia specifically, claims totalled EUR 63.4 million in 2025, up 40% year on year, and Morningstar DBRS expects claims to rise further in 2026 as the effects of recent storms materialise.

While acknowledging that claims in 2025 increased compared with 2024, Morningstar DBRS stated that they remained broadly aligned with the five-year average. Nevertheless, the agency cautioned that the growing frequency and severity of extreme weather events are exerting upward pressure on the SAC’s loss experience and on the reinsurance support provided by the CCS.

This pressure, it added, has been partly mitigated by sustained growth in premium volumes, which have expanded consistently over the past decade and exceeded EUR 1 billion for the third consecutive year in 2025, reaching EUR 1,029 million compared with EUR 673 million in 2016.

Beyond agricultural damage, Morningstar DBRS assessed that the flooding and destructive winds associated with Storms Leonardo and Marta qualify as extraordinary risks under Spain’s insurance regime. As such, insured losses arising from these events are expected to be absorbed by either the SAC or the CCS. The agency concluded that both mechanisms maintain adequate loss-absorption capacity, providing a substantial buffer that shields private insurers from significant financial strain.

Overall, Morningstar DBRS considers that although extreme weather is increasing pressure on Spain’s agricultural insurance system, the country’s established public–private structure continues to protect private insurers from exceptional losses while ensuring coverage for affected sectors.

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This new offering, available in all U.S. states except Alaska and Hawaii, and excluding wind in some coastal geographies, reportedly spans the full spectrum of agriculture property risks, filling a considerable gap in today’s market.

“By combining A-rated capacity with deep sector expertise, Rokstone Agriculture continues to deliver underwriting innovation and service excellence rooted in its deep understanding of the complex exposures facing the U.S. agriculture industry,” Rokstone said.

Rokstone explained that the launch has been enabled by its advanced technology capabilities and its proprietary underwriting and distribution platform, ATOMX.

The platform is said to provide seamless data ingestion, risk assessment and program management, allowing Rokstone Agriculture to bring complex agriculture property solutions to market with speed, precision and scalability.

As part of its strategic growth plan, Rokstone Agriculture said it intends to expand its admitted Farm and Ranch product to an additional 16 states over the next few years, with all 48 U.S. states eventually coming online in phase three.

Joshua Lauth, President of Rokstone Agriculture Farm and Ranch, commented, “We continue to buck the capacity trend and bring much-needed choice and innovation to the marketplace. We see risk as an opportunity, not merely a challenge.

“For our selected specialist agents and brokers, we’re a safe pair of hands – delivering best-in-class programs for every stage of the agricultural lifecycle.

“Where others are retreating, our market share is growing. We’re attracting talent, securing top-tier capacity, and delivering on our commitment to the U.S. agriculture industry.”

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According to Howden, drought is responsible for over half of total agricultural losses and represents the most severe threat across all EU regions. Total losses are also projected to surpass €40 billion per year by 2050 if current emissions trends continue.

As mentioned, only 20-30% of these climate-related losses are insured via public, private or mutual systems, including by Europe’s Common Agricultural Policy (CAP).

“These averages mask stark disparities in crop and livestock insurance protection across EU Member States, including many cases where protection is non-existent,” Howden suggested.

With this in mind, the firm’s report “Insurance and Risk Management Tools for Agriculture in the EU”, produced in collaboration with the European Investment Bank (EIB) and the European Commission, has presented a series of recommendations to reduce systemic risk and cushion economic shocks affecting farming communities and public finances.

These include streamlining data to enhance risk management, EU adoption of a suite of advanced risk-transfer mechanisms, including catastrophe bonds and public-private reinsurance arrangements, and scalable climate adaptation measures.

“The report recommends that the EU follow the path of other regional groups and governments by scaling up adoption of reinsurance and catastrophe bonds to protect EU budgets and provide pre-arranged, rapid-response funding when disasters strike, enabling faster recovery for farming communities. In addition, large-scale adaptation is key to sustaining subsidised insurance as risks rise, and essential in uninsured areas facing frequent losses. Policies should strengthen climate resilience at both farm and regional levels to maintain insurability,” Howden said.

Luigi Sturani, CEO of Howden Europe, commented, “Climate volatility is placing growing pressure on farmers and ultimately consumers. This report provides a clear call to action for EU agriculture and local governments to adapt.

“More robust forms of climate finance and establishing consistent risk quantification are essential to accelerating adaptation and ensuring future insurability of this essential sector.”

Massimo Reina, CEO of Howden Re International, said, “We are seeing growing interest from global reinsurers and capital markets to support EU agricultural resilience.

“Innovative financial mechanisms like catastrophe bonds and risk pooling can provide farmers, governments and the EU with the tools that they need to attract significant private sector capital to share in the risks and help secure our food systems.”

EIB Vice-President Gelsomina Vigliotti added, “Climate-related risks are an increasing source of uncertainty for food production. Mitigating these risks through insurance and de-risking mechanisms is essential to support the investments of European farmers.

“The findings of this analysis will guide our future action as we step up support to bolster the resilience of the EU’s agricultural system.”

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The product leverages the expertise of Floodbase and EarthDaily—a parametric flood platform providing advanced geospatial data and analytics for the agriculture sector.

Aimed at supporting livestock farmers, it is designed to strengthen resilience by helping prevent land loss, a common consequence of severe weather events in Colombia.

Colombia’s diverse topography makes it highly susceptible to both floods and droughts.

In November, widespread flooding devastated thousands of farms, and over the past decade, the country has experienced some of the most severe droughts in its history.

Building on LM Re’s successful drought protection pilot last year, the new product now covers both perils. Clients benefit from advanced flood mapping technology, with innovative trigger mechanisms enabling swift financial relief to affected policyholders.

The product also addresses the challenge of frequent cloud cover hampering satellite data—an issue that has previously rendered similar parametric solutions unsustainable in Colombia. LM Re’s solution can deliver a basis measure of the index daily.

Jean-Christophe Garaix, Head of Agriculture and Parametrics at LM Re, said, “With farmers in Colombia routinely relying on annual loans to farm their land, should adverse weather cause a herd loss, many must sell land to repay the loan. This product is designed to mitigate that risk, making farming much more resilient. It also simultaneously reduces the risk banks face in offering finance, creating the potential for cheaper loans, which will further help support resilient farming in Colombia.”

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The new solution covers six key crops across five regions supported by the Government of Uzbekistan through the Ministry of Agriculture, which offers a 50% subsidised premium cost to make the insurance protection more accessible to climate-vulnerable horticulture farmers.

Through a public-private cooperation between the Ministry of Agriculture of Uzbekistan, UNDP, Swiss Re, Europa Re, and local insurers Uzagrosugurta and Semurg, the first set of insurance products developed will protect cherry, grape and apricot crops against frost in 5 regions: Tashkent, Samarkand, Ferghana, Andijan and Namangan.

The second phase of insurance products will extend coverage to pomegranate, apple, and walnut crops.

Uzagrosugurta and Semurg are selling the policies, as the first phase of establishing the agricultural insurance scheme has been accompanied by training and capacity building for local insurers, loss adjusters and government stakeholders.

The ultimate goal is for more local insurers to distribute tailored agri-insurance in future phases.

For Uzbekistan’s economy, agriculture accounts for 24.3% of the national GDP, employing about 26% of the labor force. Fruit production has increased by 5.1%, with the country exporting over 1 million metric tons of fruits in 2024. Roughly 65% of agricultural production comes from dehqan farmers or smallholder farmers occupying 13% of the cultivated land.

In 2023, the “Agriculture Insurance Scheme for Horticulture Farmers in Uzbekistan” project was launched to mitigate the escalating impacts of climate change and unpredictable weather patterns on farmers’ crop yields.

Additionally, through the Tripartite project, the National Agency for Prospective Projects of the Republic of Uzbekistan (NAPP) is also supported in engaging with the International Association of Insurance Supervisors (IAIS).

Uzbekistan’s prospective IAIS membership would mark a significant step towards developing the national insurance market, enhancing transparency, competitiveness, and regulatory oversight.

On April 3rd, 2025, the agriculture insurance products were presented to local insurers’ sales force, government agencies and local farmer organizations to stimulate the sales process.

Ilkhom Juraev, Head of Financing and Subsidising Department, Ministry of Agriculture of the Republic of Uzbekistan, commented, “Risks in the agricultural industry pose a serious threat to crop production, farmers’ welfare and the economy of Uzbekistan. Given the high level of risks in agriculture, as well as their further growth due to climate change, the development of agro-insurance is one of the key ways to manage risks. I would like to note the importance for farmers to have the opportunity to insure their crops and invite insurance companies to jointly develop this area.”

Sobir Hasanov, Head of Agricultural Insurance Department, Uzagrosugurta, added, “Agroinsurance is an important area of development for the economy of Uzbekistan and one of the main methods of risk management, including climate risk management. For representatives of insurance companies and other industry-related agencies, participation in this scheme is both practical and as well as having theoretical value. On behalf of “Uzagrosugurta”, we invite farmers of Uzbekistan to protect their harvest today.”

Anas Fayyad Qarman, UNDP Deputy Resident Representative in Uzbekistan, said, “This project shows how public and private partnerships can help small farmers better cope with climate risks. With UNDP’s support, new agricultural insurance products were developed as part of wider efforts to strengthen Uzbekistan’s growing insurance sector. UNDP is also helping the government of Uzbekistan draft key legislation, develop a disaster risk finance strategy, and include insurance and risk financing in its national climate and development plans.”

Ekhosuehi Iyahen, Secretary General of the Insurance Development Forum, said, “The launch of this pilot agricultural insurance scheme is a significant milestone in advancing climate resilience for smallholder farmers in Uzbekistan. It demonstrates the power of collaboration between the private, public and development sectors to deliver innovative risk finance solutions that protect livelihoods and build greater resilience for vulnerable nations. We sincerely thank Europa Re and Swiss Re for their technical expertise and commitment in working alongside local insurers, UNDP, and the Government of Uzbekistan to develop tailored insurance products that will support thousands of farmers in mitigating climate-related risks.”

Dr. Annette Detken, Head of InsuResilience Solutions Fund, concluded, “This initiative marks a significant milestone in strengthening climate resilience for Uzbekistan’s deqhan farmers. By leveraging public-private collaboration, we are not only expanding access to insurance but also ensuring that smallholder farmers – who form the backbone of Uzbekistan’s economy – have the financial protection needed to withstand climate shocks. The ISF is proud to support this effort, which aligns with our mission to enable sustainable climate risk financing solutions for vulnerable communities. We look forward to seeing these insurance products scale and provide tangible benefits to farmers across the country.”

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At the 10th African Regional Forum on Sustainable Development (ARFSD), experts urged policymakers to assess farmers’ needs and improve access to funding to meet the Malabo Commitment to end hunger by 2025 and achieve the Sustainable Development Goals (SDGs) by 2030. Key strategies include collaborative efforts, private sector engagement, and strategic partnerships.

The ARC highlights the significance of Africa’s agricultural sector, which provides 70% of the continent’s food supply. However, it is under threat from increasing extreme weather events caused by climate change, leading to soil degradation. This degradation costs farmers up to $1,400 annually and has affected 65% of Africa’s soil, upon which 83% of sub-Saharan Africans rely for their livelihoods.

Addressing these challenges requires significant investment, yet investor caution and funding obstacles persist. Overcoming these hurdles is crucial for achieving agricultural transformation and food security outlined in the African Union Agenda 2063.

The Russia-Ukraine conflict, increasing global food insecurity by disrupting Ukraine’s agricultural exports, presents an opportunity for Africa, according to ARC: “By improving yields and insuring them against climate risks, African farmers could help close the gap, unlocking immense economic growth and development potential. Tapping into finance would also help farmers expand into the 60% of arable land that is still uncultivated on the continent.”

Under the Comprehensive African Agricultural Development Programme (CAADP), African governments aim to allocate 10% of national budgets to agriculture and rural development, but more may be needed.

Governments could also help by subsidising climate insurance to encourage investment, with private sector involvement crucial for driving innovation and addressing industry challenges.

ARC Ltd., the financial arm of the ARC Group, demonstrates the impact of addressing farmers’ needs and forming strategic partnerships. The company offers micro and meso insurance products to small and medium-scale farmers, protecting assets and income from droughts and other risks. By insuring banks against defaults during severe weather events, ARC Ltd. enables more lending to farmers for productivity and income growth.

Lesley Ndlovu, CEO of ARC Ltd., states, “There is no story that can be told about African development without taking into account agriculture and the need to protect investments in the sector.”

Moreover, ARC Ltd. has been involved in various projects across Africa to expand climate insurance and benefit African farmers.

ARC Ltd. has also partnered with the US Government (USG) on an $11.7 million project to protect vulnerable smallholder farmers and African governments against climate risks. Ange Chitate, Project Head and ARC Ltd. Chief Operating Officer, explains, “Our priority with this grant is to provide coverage to 19 states.”

Chitate adds, “With the support of the USG, we will be refining and developing innovative products to meet the evolving needs of these countries.”

Future plans involve developing tailored micro and meso insurance for diverse beneficiaries, including pastoralists and humanitarian organisations.

ARC concludes, “With escalating climate risks, innovative financing solutions like parametric insurance have significant potential to safeguard farmers’ livelihoods and drive development across the continent. Increased awareness and understanding are essential to encourage uptake. More investment in this space and policy reforms are also imperative to scale up climate risk management strategies and to empower Africa’s farmers.”

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“There is a lot of reinsurance supporting India agriculture today, but in terms of growth, it is shrinking. So, companies like ours come into the picture and bring new premium into the system, which the current reinsurers are not able to support due to a lack of capacity,” said Nukala.

Expanding on this, Nukala said, “There is space for participation from new domestic insurance companies along with GIC and other global players. For players like ourselves, availability of more domestic reinsurance capacity will make business and growth more efficient”

Nukala is of the opinion that portfolio diversification and technology are the two key positives for investing in the Indian market today.

“India is a large country with diversified datasets,” he explained. “So, when we are added to an existing portfolio of a reinsurer which does not have any exposure in India, we help in diversifying their portfolio better and enhancing their returns. We provide that diversification.”

“For example, a cyclone in India doesn’t mean that something is happening in the Philippines at the same time. The bottom line is that Indian business can be a great diversifier,” added Nukala.

Kshema registered with the Insurance Regulatory and Development Authority of India in November 2022 and subsequently had its license issued. The company’s operations are fully digitised.

Nukala described the insurer’s model as easy-to-use, where the farmers are directly encouraged onto an onboarding process for the company application, which has been enabled in 11 regional languages.

It also boasts a customer centric application, where a client can decide the natural perils they want to be insured against.

Nukala also highlighted the important role of some of the backend technology, where the pricing and loss assessment takes place through data sources that are both API and satellite driven.

Expanding on the technology point, Nukala stressed, “Companies like us that are completely digitally driven, we are able to get our PML ratios in almost near real-time. I can analyse and see what my portfolio is looking like and how it is performing. So, companies like us, which are totally built on and dependent on the entire infrastructure being technology-led, gives us greater transparency in the entire business. These are the two major advantages that I see for participating in the Indian marketplace.”

Of course, India, like many parts of the world, is still extremely underpenetrated in terms of insurance, but companies like Kshema serve as a bridge to lessen the protection gap that exists in the market.

India as an economy has a higher purchasing power in rural sectors, that has so far been untapped due to the lack of infrastructure, although efforts by Kshema and others has started to change this.

The two major perils faced by Indian farmers are drought and cyclones. Kshema insurers against “All act of God perils”, and the company has products for 9 perils with different levels of settlement.

Ultimately, Kshema’s aim is to use its deep expertise to help farmers who are dependent on essentially all regional crops, fruits, vegetables, or spices.

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A recent report from the SECP on crop and livestock insurance showcases that the insurance pool may first propose standardised contracts that cover specific risks in order to limit transactions costs and adverse selection problems.

According to Business Recorder, the SECP recommended that the government make more efficient use of resources and also enhance capacity within the local insurance industry by converting the existing CLIS scheme into a broad-based co-insurance pool structure.

Moreover, in the first phase, the scope of this co-insurance pool can be limited to CLIS and subsequently, its scope can be enhanced.

From what we understand, such a mechanism will effectively make an applicable limit of liability cap on the total premium received at the consortium level, which will be considerably higher than the existing cap applicable on premiums received by individual companies.

However, the risks associated with pools need to be mitigated via reinsurance arrangements with globally sound and internationally rated reinsurance companies.

It is important to note, that this can be done either through per-life, per-event, individual or aggregate reinsurance, and/or stop loss arrangements of different formats.

Further, the report notes that the purpose is to protect the pool from being completely burnt out and to bring global technical expertise and reinsurance support for the local general population.

Other administrative modalities for the finalization of such a mechanism can be discussed and agreed upon between all the stakeholders.

The report also added that there is a notable absence of any national crop and livestock insurance schemes catering specifically to non-loanee farmers across the country.

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The additional anticipated benefits will include a reduction of supply chain risks for the food and beverage sector, as well as new opportunities for the expansion of global agricultural value chains.

The collaboration aims to leverage first-of-its-kind, farm-level data produced by Amini that is intended to enable Aon’s support of the African Development Bank’s Africa Climate Risk Insurance Facility for Adaptation, to develop innovative de-risking solutions and build capacity to assess and monitor the changing risk environment across the continent.

The companies explain that the data provided will enable farmers to make better-informed decisions leading to greater resiliency and yield improvements.

The collaboration also aims to help Aon clients with extensive supply chains or balance sheet exposure to the agricultural sector to manage the multi-faceted impacts of climate risk better.

Eric Andersen, President of Aon, commented, “Aon is at the forefront of transformational innovation, supporting our clients as they face increasing, interconnected climate risks.

“Risk capital is a vital component of the climate transition and insurance stakeholders needs to innovate faster to address the world’s rapidly changing needs. Our collaboration with the African Development Bank and Amini is a perfect example of a more holistic approach to risk.”

According to the African Development Bank, Africa houses 65% of the world’s uncultivated arable land. Yet the OECD reports that Africa only accounts for 3% of global GDP.

The lack of environmental data has prevented the expansion of agricultural crop insurance, stunting the growth of the agri-food sector, and preventing climate adaptation through regenerative farming practices.

Beth Dunford, Vice President of the African Development Bank, added, “The Africa Climate Risk Insurance Facility for Adaptation is a model of how strategic collaborations can significantly advance our efforts in climate risk management and agricultural sustainability.

“Aon’s global experience in risk management, combined with Amini’s technological innovation, forms a strong alliance that supports the Bank’s vision for a resilient agricultural sector capable of withstanding and thriving amidst the challenges posed by climate change.”

Kate Kallot, Founder and Chief Executive Officer of Amini, said, “Our collaboration with Aon will help strengthen and accelerate our platform deployment with world-leading companies driven to improve their sustainability practices, while reinforcing the resilience of their extensive supply chains.

“Together, we have a unique opportunity to kickstart positive feedback loops which will transform global food systems and support the regeneration of natural capital at scale.”

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The global agricultural insurance market has grown significantly due to the increasing need for risk management tools in agriculture. According to Swiss Re, the global agricultural insurance market will be valued at $46 bn in 2020 and is expected to reach $80 bn by 2030, growing at a compound annual growth rate (CAGR) of 5.7%.

The agricultural insurance market in Africa has experienced this growth; which has been driven by increased demand from farmers for risk management solutions and the development of new technologies and risk models.

“Despite the economic importance of the agricultural sector to many African countries the agricultural insurance market in Africa is underdeveloped, with low penetration and a limited range of products,” the report highlighted.

Adding: “In 2020, African agricultural insurance premiums were estimated at $320m, representing 1.6% of total African non-life insurance premiums of USD 19,730 million. Despite being slightly higher than the global share of 1.3%, there is a large untapped potential.”

Agricultural insurance coverage varies widely from country to country, leaving most smallholder farmers uninsured. For them, agricultural insurance secures livelihoods and primarily offsets the risks associated with weather variability, Faber analysts explained

Only 1% of smallholder farmers in Africa were insured in 2016/2017, compared to more than 15% in Latin America and nearly 50% in Asia, Faber analysts noted.

Experts emphasised the key role the African re/insurance sector has to play in addressing food security in the continent.

Jean Baptiste Ntukamazina, Secretary General of the AIO, said: “Agricultural insurance is critical to promoting food security in Africa. It acts as a safety net for farmers and food producers by transferring the financial risk of production or distribution to the insurance sector.

“This stabilises food production and increases resilience to disasters. In addition, insurance provides incentives for sustainable practices such as conservation agriculture and crop diversification, thereby improving food security. Insurance also helps facilitate investment in new technologies and infrastructure, ultimately increasing agricultural productivity.”

To further improve food security in Africa, experts noted, African governments should provide financial support for the development of agricultural insurance markets in emerging economies.

In addition to premium subsidies, governments can support the sector by improving the accuracy of data on the sector, enhancing financial education or providing catastrophe reinsurance.

“Besides the government, other institutions, such as banks, input suppliers or community organisations may serve as aggregators or enablers of agricultural insurance by providing agricultural extension services, including training, credit, distribution of seeds, fertiliser or herbicides, organising cash crop exports or facilitating access to finance,” the report stated.

“Another important factor in promoting the sustainable development of agricultural insurance is the need for a regulatory framework that encourages growth and innovation in the sector. Such a framework should promote flexible product design, capacity building and public awareness, risk-based pricing, clarity and consistency in regulation, and cooperation among stakeholders to support the growth and sustainability of the sector,” experts concluded.

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