{"id":91935,"date":"2024-11-22T08:13:16","date_gmt":"2024-11-22T11:13:16","guid":{"rendered":"https:\/\/murray.adv.br\/?p=91935"},"modified":"2024-11-22T08:13:18","modified_gmt":"2024-11-22T11:13:18","slug":"adverse-weather-drives-demand-for-rural-insurance-in-low-adoption-areas","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/adverse-weather-drives-demand-for-rural-insurance-in-low-adoption-areas\/","title":{"rendered":"Adverse weather drives demand for rural insurance in low-adoption areas"},"content":{"rendered":"\n
In the Central West, insured soybean acreage rose by 500,000 hectares<\/strong><\/em><\/h6>\n\n\n\n

<\/p>\n\n\n\n

<\/p>\n\n\n\n

<\/p>\n\n\n\n

11\/22\/2024<\/p>\n\n\n\n

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The rising frequency of extreme weather events in Brazil and the increasing difficulty of predicting adverse conditions and their impacts on agriculture have driven greater demand for rural insurance, particularly in regions that have historically avoided such protections.<\/p>\n\n\n\n

The insured soybean area\u2014the primary product covered under the Rural Insurance Premium Subsidy Program (PSR)\u2014has already surpassed 2023 levels. According to Glaucio Toyama, president of the Rural Insurance Commission of the National Federation of General Insurance (FenSeg), 3.8 million hectares of soybeans have been insured for the 2024\/25 harvest, up from 3.1 million hectares in the previous cycle.<\/p>\n\n\n\n

Soybean producers in Mato Grosso, Mato Grosso do Sul, Goi\u00e1s, and the Federal District have insured 1.6 million hectares this season, compared to 1.1 million hectares in 2023\/24.<\/p>\n\n\n\n

Among them is Dieicson Siqueira Serpa, who planted 1,500 hectares of soybeans across Goiatuba, Morrinhos, and Panam\u00e1 in the southwest of Goi\u00e1s. After the soy harvest, the land will be used for corn and sorghum. Part of these crops are insured. \u201cInsurance is a way of staying in the market. With the climate, relying solely on personal or financed resources without protection is too risky. Everything is at risk: rain, drought, hail,\u201d he said.<\/p>\n\n\n\n

Mr. Serpa noted occasional losses and claims, particularly for the second sorghum crop, but cited the cost of insurance as a significant barrier to broader adoption. \u201cWhen producers have their own resources, they often skip insurance because it\u2019s too expensive and makes the business unviable,\u201d he explained.<\/p>\n\n\n\n

Brasilseg, a leader in Brazil\u2019s rural insurance segment, reported notable growth in forest and livestock insurance policies between January and August 2023. Forest insurance saw a 719% increase, with the insured area expanding from 52,000 to over 426,000 hectares. Livestock insurance rose 134%, covering 10,000 hectares of pasture compared to 4,000 the previous year.<\/p>\n\n\n\n

Despite this increase in coverage, insurers have faced a challenging year. Rural insurance revenue fell by 3.2% to R$9.6 billion by August, according to Superintendence of Private Insurance (Susep) data compiled by the National Insurance Confederation (CNseg). These figures also include life insurance and rural pledges.<\/p>\n\n\n\n

In September, CNseg revised its growth forecast for the rural insurance market, cutting expectations from 7.9% to just 1%. By year-end, the projection had been further reduced to 23.1%, primarily due to delays in disbursing PSR subsidies.<\/p>\n\n\n\n

Another contributing factor is the decline in the average rural insurance premium, which fell from 7.47% to 6.86%. This decrease reflects the growing uptake of policies outside Rio Grande do Sul and Paran\u00e1\u2014historically the main consumers of rural insurance\u2014resulting in a more diversified distribution of risk. FenSeg\u2019s data, however, focuses exclusively on crop insurance.<\/p>\n\n\n\n

The results remain below industry expectations. According to Mr. Toyama, the market had anticipated greater expansion due to increased interest from farmers.<\/p>\n\n\n\n

The exhaustion of the PSR budget, albeit later than usual, has tempered hopes for a stronger recovery in the rural insurance market. Following budget cuts and freezes, nearly R$890 million was invested in 2023\u2014the lowest level since 2020\u2014excluding the R$210.8 million earmarked for policyholders in Rio Grande do Sul, set to be released soon.<\/p>\n\n\n\n

In late October, the FenSeg commission sent a letter to the Ministries of Agriculture, Finance, Planning, and Budget, urging the release of R$52.9 million from the PSR budget and requesting an additional R$197.8 million to cover the backlog of unsubsidized policies and projected demand through the end of the year.<\/p>\n\n\n\n

However, the chances of this request being granted are slim amid ongoing government discussions on spending cuts. The Secretary for Agricultural Policy at the Ministry of Agriculture, Guilherme Campos, highlighted the challenges of securing additional funds in the current fiscal environment. \u201cThe resources are too limited. They help, but they don\u2019t solve the issue. With the government\u2019s financial constraints, it\u2019s all about cutting back,\u201d said Mr. Campos, noting that the blocked R$52.8 million is expected to be restored to the Ministry\u2019s budget by December.<\/p>\n\n\n\n

Insurers are increasingly concerned about the outlook for the next winter crop in 2025, which carries the highest climatic risks. While demand for rural insurance policies is accelerating, uncertainty about the 2024 budget looms large.<\/p>\n\n\n\n

Although the 2025 budget proposal allocates R$1.06 billion to the PSR, the sharp rise in the Agricultural Activity Guarantee Program (PROAGRO, a 50-year-old agricultural insurance program designed to protect farmers against uncontrollable natural losses) rates could drive producers toward rural insurance, intensifying competition for these funds. Mr. Toyama of FenSeg warned that resource shortages are likely, especially during the winter harvest.<\/p>\n\n\n\n

\u201cThis impacts everything. If a clear plan isn\u2019t in place, producers face tough choices: go without insurance and compromise their margins, take Proagro coverage at rates of 20% to 30%, or buy insurance at 10% to 15% without subsidies. In the absence of subsidies, they may lower their technological investment in crops, ultimately affecting productivity,\u201d he explained.<\/p>\n\n\n\n

\u201cWe are working to make the government aware of the need to raise the allocation to at least R$2 billion, but we\u2019ve yet to receive a positive response,\u201d said Esteves Colnago, CNseg\u2019s director of institutional affairs.<\/p>\n\n\n\n

The broader issue, as noted by Mr. James Hodge, director of agribusiness and construction at WTW, is the low uptake of rural insurance in Brazil. \u201cEven with rising participation, the country remains at the same levels seen a decade ago, far from the 2021 peak. Only 10% to 15% of producers are insured,\u201d he pointed out.<\/p>\n\n\n\n

This year, sporadic spikes in interest were observed following fires in August and September, \u201cparticularly for citrus crops and drought-related risks,\u201d Mr. Hodge added. However, with the anticipated arrival of La Ni\u00f1a and increased rainfall, demand has since returned to typical levels.<\/p>\n\n\n\n

*By Rafael Walendorff, Rita Azevedo, Globo Rural \u2014 Bras\u00edlia and S\u00e3o Paulo<\/p>\n\n\n\n

Source: Valor International<\/p>\n\n\n\n

\nhttps:\/\/valorinternational.globo.com\/\n<\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"

In the Central West, insured soybean acreage rose by 500,000 hectares 11\/22\/2024 The rising frequency of extreme weather events in Brazil and the increasing difficulty of predicting adverse conditions and their impacts on agriculture have driven greater demand for rural insurance, particularly in regions that have historically avoided such protections. The insured soybean area\u2014the primary […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8106],"tags":[25652,25653],"class_list":["post-91935","post","type-post","status-publish","format-standard","hentry","category-murray-news","tag-adverse-weather","tag-demand-for-rural-insurance"],"yoast_head":"\nAdverse weather drives demand for rural insurance in low-adoption areas - Murray Advogados<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/murray.adv.br\/en\/adverse-weather-drives-demand-for-rural-insurance-in-low-adoption-areas\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Adverse weather drives demand for rural insurance in low-adoption areas - Murray Advogados\" \/>\n<meta property=\"og:description\" content=\"In the Central West, insured soybean acreage rose by 500,000 hectares 11\/22\/2024 The rising frequency of extreme weather events in Brazil and the increasing difficulty of predicting adverse conditions and their impacts on agriculture have driven greater demand for rural insurance, particularly in regions that have historically avoided such protections. 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