Agriculture, 900 million climate revenues lost in one year Insurance premiums on the rise

At the same time as the growth in insured values, the market has been characterised by a significant increase in insurance rates. For example, in the market for vegetable crops, the average premium (i.e. the premium per EUR 100 of insured value) has risen from around EUR 6 in 2010 to around EUR 10 in 2022, resulting in an increasing difficulty in obtaining insurance, especially for small and medium-sized companies.

"The agri-food sector, fundamental for the functioning of the Italian economy, today presents a high degree of fragility as a consequence of its increasing exposure to climatic events," says Matteo Laterza, CEO UnipolSai assicurazioni. "This is why we support the LifeAda Project, which addresses this critical issue by focusing, in particular, on the continuous interaction between insurance companies and operators in the agri-food sector, as the main enabler that favours an increasing adaptation of agricultural enterprises to the consequences of climate change.

LifeAda is an initiative that took its first steps in 2020 through public-private synergy to address the issue of climate change with the aim of increasing the resilience and adaptation of agriculture to change.

Between rain, hail and prolonged drought, claims are growing exponentially, and with them the costs of agricultural insurance are also rising. According to the technical accounts of the agricultural insurance industry (Ania, 2023), the costs of compensation and claims management have risen over time, from around EUR 400 million in 2012 to around EUR 800 million in 2021.

This growth formed the basis for the trend increase in total gross earned premiums, which grew in order to bring the line of business technical account back into balance. In fact, the combined ratio, averaged over the years 2012-2022, was about 110%, signalling a higher sum of claims and claims management expenses than premiums.

"Over the last 10 years, reimbursements due to events related to natural disasters have multiplied, so today there is also an issue of insurability of agricultural enterprises," Laterza continues. The Life Ada project seeks to respond to this emergency by adapting climate businesses to climate risk,' Laterza continues. An ambitious goal that can only be achieved 'through continuous dialogue with entrepreneurs and the regions and by pooling knowledge and skills that allow for more advanced risk management, leading to adaptation plans by companies, also thanks to the use of technology'. Ongoing training and targeted research on tools to mitigate extreme weather events "will allow agricultural businesses to access insurance with a reduction in premium. This is a highly complex project, therefore, which requires the commitment of the entire financial system and, according to a logic of public-private partnership, of all the institutions, with particular regard to the role of the Regions. 'All solutions to the country's major problems pass through public-private partnerships,' Laterza concludes. In this case, it is not a question of allocating resources as much as sharing data, because especially in agriculture we need as many plans as there are production areas, and in this direction the regions have a crucial role'.