Crop Insurance Market Size Worth USD 65.07 Bn by 2030 With CAGR of 6.1 Percent

The Crop Insurance Market was valued at $42.99 billion in 2023, and is expected to reach $65.07 billion by 2030, at a CAGR of 6.1% during the forecast period. The growth is mainly attributed to rising government initiatives to protect farmers against income fluctuations along with innovations in technology improving insurance accessibility.

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Drivers and Opportunities of the Market Growth

Climate change, uncertain weather patterns, and natural disasters contribute to worsening challenges for agriculture, resulting in increased risks for farmers. Governments across the globe are already taking supportive measures to address these risks. One such initiative is the Pandemic Cover Crop Program (PCCP) launched by the United States Department of Agriculture (USDA) in 2022, which incentivizes cover crop adoption with premium payouts to farmers, supporting sustainable practices and providing economic relief. Over the years, India was better equipped to manage a financial crisis largely due to the FDI cap being raised to 49% in 2016 which saw foreign investments flowing in to the agricultural insurance sector making it increasingly viable and widespread.

Technology-induced innovations are also transforming the crop insurance landscape. State-of-the-art AI combined with geo-referenced cadastral mapping supports easy application and accurate reporting of insured areas. Furthermore, this technological progress is helping to lower administrative costs, and also allows for more tailored insurance products and ultimately helps address the cost incurred by individual farmers, driving a higher uptake.

Segmentation Analysis

Based on coverage type, the crop insurance market is segmented into multiple-peril crop insurance and crop-hail insurance, while based on application, the crop insurance market is segmented into developed countries/countries and emerging countries/countries.

Coverage Type:

Crop-Yield Insurance The Crop-Yield Insurance segment provides coverage against loss in crop yield due to natural disasters such as droughts, floods, and pests. Farmers are compensated if their actual yield is below a predetermined threshold.

Crop-Revenue Insurance- This protects farmers from revenue losses arising from a decrease in market prices or yield. It guarantees the income for farmers and stabilizes their financial planning.

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Application:

Banks: Provide crop insurance as part of their agricultural loan products, which ensures the repayment of loans offered to farmers and helps them manage risks.

Dedicated insurance firms focused solely on agriculture create specialized products that meet particular regional risks and farmer needs.

Brokers/Agents - These intermediaries are essential for helping farmers understand what they can insure and what policies they should select, as well as helping them through the claims process, creating a bridge between them and insurance providers.

Country-Level Analysis

United States: The United States has a mature crop insurance program heavily subsidized by the federal government. USDA's Risk Management Agency (RMA) manages programs offering coverage across many crops and regions, resulting in broad farmer participation. New schemes, such as the value of the PCCP, were established in 2022 to promote sustainable farming practices, marking a shift towards the inclusion of environmental factors in insurance schemes.

Germany: Crop insurance is gaining traction among German farmers as an instrument to mitigate climate-related risks. Farmers are increasingly turning to crop insurance schemes to protect their income, with the German government backing multi-peril schemes that cover a wide range of calamity events, particularly following recent extreme weather and pest-induced losses. Public-private partnerships are making these insurance products more affordable and accessible.

China: One of the world's biggest agricultural producers, China has greatly grown its crop insurance programs. This increased uptake has also been made possible by government subsidies that have helped make premiums more affordable for farmers. The emphasis is on safeguarding staple crops such as rice, wheat, and corn, while pilot programs are testing coverage for specialty crops and innovative insurance models.

India: Agriculture is a key sector in India, contributing a significant share of India's GDP and a wide base of employment. The Pradhan Mantri Fasal Bima Yojana (PMFBY), introduced in 2016, seeks to offer extensive protective coverage for crops. Though this did present a challenge in implementation, the initiatives have been put in place to be able to bridge the gap from increasing farmer awareness to streamlining the claims settlement process and technology will play a decisive role in these advancements.

Brazil: Brazil is vulnerable to a number of risks, given its different climate zones and large agricultural area. The government has been introducing rural insurance programs and providing subsidies to make the premiums more accessble to the farmers. It emphasizes including all parties, from soybeans and corn to coffee and sugarcane, noting the diversity of the country's crops.

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Competitive Analysis

There are several players in the crop insurance market that are trying to seek out their market share, and such players are focusing on wide range of initiatives. Notable companies include:

PICC (People's Insurance Company of China): One of the largest insurers in China, PICC has a strong agricultural insurance portfolio, and their services are growing to meet the diverse needs of Chinese farmers.

Zurich (Zurich Insurance Group): As a insurer, Zurich provides numerous crop insurance products, drawing on its worldwide experience to offer local markets innovative solutions.

Operating in several nations, Chubb has extensive crop coverage insurance plans with an emphasis on not only conventional, but specialized plants as well, all while stressing risk management and prevention of loss.

QBE Insurance: QBE is a leading provider of agricultural insurance products with a strong focus on the Asia-Pacific region.

China United Property Insurance: This insurer focuses on property and casualty protection and has expanded greatly into the agricultural sector in China.

Industry trends show mergers and acquisitions focusing on market consolidation and growth in service offerings as well. For example, in 2022, Chubb finalized the buyout of Cigna's life and non-life insurance businesses across various markets, adding to its presence in the Aisa-Pacific region and expanding its product offering.

Conclusion

The crop insurance market is also anticipated to grow substantially during this period, due to rising agricultural risks, government policies, and technology advancements. Farmers ly are more prepared as stakeholders are partnering to co-create novel and affordable insurance products.

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