What to know about the new crop insurance dictated by climate change

While just under 31% of French farmland is insured, the aim is to “create a real shock in the distribution of insurance”, confirms the government, which proposes a system that is open to “all farmers, insured or not”.

This new system, defined by a law announced in March, “is based on national solidarity and risk sharing between the state, farmers and insurance companies”according to the ministries of economy and agriculture.

As a replacement for the current units, this “universal compensation scheme” has three levels: a first level is under the responsibility of the farmer, who alone will bear the losses up to a deductible limit of 20%; another comes under the private insurance company (up to 50%); and a third mobilizes public funds to respond to disaster situations.

A stroke “every year”

This reform was expected by both operators and insurance companies hoping for“stop losing money”according to a Groupama manager.

Among farmers, the frost of 2021, which destroyed vineyards and fruit trees, served as a “trigger”, told AFP Joël Limouzin, who is responsible for the case at the majority agricultural union FNSEA.

“We no longer face a hard hit every five or six years: it’s now every year. After 2021, operators realized they could no longer cope with climate change alone.”he continues.

The previous system, since the 1960s, had been based on the system of agricultural disasters, co-financed by the state and industry. “It excluded field crops and viticulture sectors” which from 2005 were encouraged to take out insurance against partial coverage of the premiums, explains Mr. Limouzin, according to whom these productions were not necessarily well covered by the insurance.

“The new system is for everyone, which is important to us”, he adds. For insurers, it was necessary to return to a minimum balance without inflating premiums too much to remain attractive.

“The reform responds well to these major problems”, believes Delphine Ltendart, director of insurance for Groupama, the main insurance company for farmers at Pacifica (Crédit Agricole).

In order to encourage farmers to take out insurance, the public compensation for the uninsured in case of major losses will be reduced.

The insurance company is placed at the center of this new system and will be the single point of contact for operators for any claims, regardless of whether the areas are insured or not.

Not ready January 1st

This “one-stop-shop” system will not be ready on January 1 for the vast majority of farmers, the Ministry of Agriculture announced on December 19.

In fact, the state has not yet reached an agreement, financially and technically, with the insurance companies that will manage the compensation for the uninsured in the event of extraordinary losses on its behalf.

The latter will therefore, during a transitional period, have to turn to the state’s services at departmental level, “until 31 December 2023 at the latest”.

“By 2030, we hope to reach 60% of the insured in field crops and viticulture (compared to 30% today) and 30% in meadows and tree farming.” (less than 4%), states Joël Limouzin and emphasizes that “the more there are, the lower the prizes”.

The concern is already there among breeders, who dispute the method of assessment (via satellite) of damage to the meadow, synonymous with feed loss.

In field crops or in the vineyards, most farmers contacted by AFP are concerned about prices and say they do not yet have enough information in hand to make a choice.

In the Gard, Jean-Luc Lapeyre, who lost 50% of his vines in 2022 and is not insured, estimates that“Insurance should be made compulsory to really lower premiums”. Because now it isn’t “not convinced”.

The insurance companies themselves awaited the final arbitrations on the reform before launching major information campaigns.

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