Frost episode: Insurers are fully committed to insured farmers and call for a change in the the weather risk insurance system for crops
The French Insurance Federation (FFA) has announced measures to support insured farmers and is campaigning for a reform of agricultural risk insurance to encourage more professionals to protect themselves against climate hazards. Indeed, although comprehensive climate policies offered by insurers include “crop frost” coverage, too many farmers today choose to not get insured.
The frost episode that occurred at the beginning of April affected the entire agricultural world, in particular farms in the southern part of France, and mainly viticulture, arboriculture and certain field crops such as rapeseed and beet. Although these climate episodes have tended to recur for several years, this year’s is particularly dramatic and will have an even greater impact on the farming sector due to the advanced growth of the crops. Many farmers could lose up to 100% of their 2021 crop. In response, insurers took measures last week to strengthen their claims management teams and got experts ready on the ground to assist their affected policyholders.
Measures to support insured farmers
The weather conditions in the coming weeks and months will determine actual yield losses at the end of the harvest period. In this context, insurers are proposing measures for their policyholders to help them through this ordeal. These measures include:
- Insurers will cover the costs of reseeding field crops where this is the most appropriate solution,
- Insurers are willing to offer the option to spread the payment of the premiums for comprehensive climate contracts on crops beyond the 1 October 2021 deadline, for farmers under financial hardship, provided that the State maintains the subsidy right for farmers,
- Insurers propose to communicate, subject to compliance with the General Data Protection Regulation, the expert reports to the Government to facilitate and accelerate the compensation of the National Agricultural Risk Management Fund,
- Insurers will pay compensation to their policyholders as quickly as possible to alleviate farmers’ cash flow issues following yield losses.
The need to develop the risk coverage system to fight against the phenomenon of non-insurance
The current frost phenomenon highlights the phenomenon of uninsured farmers. Only 30% of cultivated areas are covered by a comprehensive climate contract and this rate falls to 3% for arboriculture.
Insurers have been lobbying for years for changes in the agricultural risk coverage system to reduce the extent of non-insurance. Solutions have been proposed by the FFA (increasing the subsidy rate of insurance premiums, lowering the compensation threshold or the deductible) to give farmers more of an incentive to protect themselves.
Florence Lustman, President of the French Insurance Federation, stated: “I express my full support to the affected farmers, and I understand their concern over the such difficult situation they are facing. Because insurance is the solution to avoid the disarray that follows each major climate hazard, we must, with all stakeholders, make the agricultural risk coverage system evolve to fight against non-insurance. Once again, we are fully committed to finding solutions to better protect our citizens. »