The new crop insurance system, defined by a law promulgated in March, offers a three-tier universal risk coverage system.
- A first level is the farmer’s liability, which will only cover losses of “current contingencies” up to a deduction threshold of 20% (compared to 30% previously)
- Another level, for “significant hazards”, will be the liability of the private insurance company, which will assume responsibility for between 20 and 50% of crop losses.
- Finally, “extraordinary perils” would trigger government intervention, including for uninsured farmers.
The compensation rate set within the framework of national solidarity will be 90% for policyholders from all cultures. It will be lower and decreasing for the uninsured: 45% in 2023, 40% in 2024 and 35% in 2025.
A threshold to trigger national solidarity is set at 50% of the losses for the groups “arable crops, industrial crops and vegetables” and “viticulture” and at 30% for other productions, in particular tree cultivation and grassland.
To encourage farmers to take out insurance – today 31% of cultivated land is insured – the government has raised the level of the public contribution to 70% (against 65% currently).
How is the crop insurance premium calculated?
He also wanted to simplify the system by introducing a “one-stop shop” which will be managed by insurance companies. However, this window will not be operational on 1 January for the vast majority of farmers, the Ministry of Agriculture announced on 19 December. In fact, the state still has to reach an agreement “on the technical and financial level” with the insurance companies, which will manage the compensation for the uninsured in the event of extraordinary losses on its behalf. The latter will therefore have to turn to state services at departmental level (departmental management of the areas) in a transitional manner, “until 31 December 2023 at the latest”.
- The new crop insurance dictated by climate change
- Drought, hail… “the addition of these climatic events is disturbing”
that crop insurance premium calculationwhich depends on the valuation of the insured capital and thus the return losses, will be based on the last three years or the “Olympic average”, which takes into account the last five years, removing the worst and the best .
The law recommends the creation of a pool of insurance companies which will enable pooling of agricultural data and pooling of risks to establish the fairest insurance premium while maintaining price competition between companies. The state (in a July 29 ruling) gave insurers 18 months to organize and will impose an injunction if they haven’t agreed by then.