Business insurance

Crop insurance payments rise sharply due to climate change

(Reuters) – Insurance payments to U.S. farmers for crops lost to droughts and floods have more than tripled in the past 25 years, according to a published Environmental Task Force analysis of federal data. Thursday.

The report reinforces concerns that insuring the country’s crops will become more costly for insurance companies, farmers and taxpayers as climate change brings more erratic weather events that disrupt agriculture.

The federal government pays about 60% of the nation’s crop insurance premiums through taxpayer subsidies, according to the Congressional Budget Office, and those premiums tend to rise as insurance payments increase.

Insurance payments to farmers due to drought have increased by more than 400% between 1995 and 2020 to $1.65 billion, while payments due to excess moisture – such as flooding – have increased by nearly 300% to $2.61 billion, according to the nonprofit environmental group, which reviewed publicly available data. of the United States Department of Agriculture.

Reuters reviewed the data, which showed a steady upward trend in insurance payments over the period.

Over the period analyzed by EWG, the number of insured acres increased by only 84.5%, according to data from the department’s Risk Management Agency, which administers the federal crop insurance program. .

“While extreme weather has become more frequent, the climate crisis has already increased insurance payments and premium subsidies. These costs are expected to increase further, as climate change brings even more unpredictable weather,” said EWG in the report.

The report did not detail average premium increases since 1995. However, the cost of crop insurance could increase between 3.5% and 22% by 2080 due to climate change, even if farmers adapt this what they planted and where they planted, according to a 2019 USDA study. report.

The most commonly insured crops are corn, soybeans, wheat and cotton.

The federal crop insurance program requires farmers to meet minimum conservation standards, such as not planting on land that is highly susceptible to erosion.

But Anne Weir Schechinger, the EWG’s Midwest director, said those standards should be stricter. “The program needs to be reformed to encourage farmers to be resilient to the extreme weather events that we know are coming,” she said.