Crop Insurance Market Forecast to Grow
The global crop insurance market is projected to reach $98.26 billion by 2031, according to a report from Mordor Intelligence. Key growth drivers include the use of digital underwriting to lower loss ratios, the expansion of government subsidy programs, and an increase in climate-related agricultural losses. Public-private partnerships in the sector are expected to grow at a 12.31% compound annual growth rate.
- The United States leads the crop insurance market, with North America accounting for over 40% of the market share. This is largely due to strong government support, including the Federal Crop Insurance Program (FCIP), which subsidizes premiums for farmers. On average, these subsidies cover about 63% of the total premium cost. - Key private players in the global crop insurance market include companies like QBE Insurance Group, Chubb Ltd., and Sompo Holdings Inc. In the U.S., these three companies hold significant market share, with QBE at 28%, Chubb at 21%, and Sompo at 18%. - From 1995 to 2024, drought has been the leading cause of loss, accounting for nearly 35% of indemnity payments in the U.S., followed by excess moisture and rain at almost 24%. Indemnity payouts reached a record high of $19.2 billion in 2022 due to extreme weather events. - Insurtech is playing a growing role in the industry, with artificial intelligence, satellite imagery, and drones being used for more precise risk evaluation, damage assessment, and fraud detection. This technology helps automate claims processing and can reduce the time it takes to verify damages from weeks to a much shorter period. - The Asia-Pacific region, particularly China and India, is expected to be the fastest-growing market for crop insurance. Government initiatives like India's Pradhan Mantri Fasal Bima Yojana (PMFBY) are expanding coverage to include assets like tractors and livestock, driving growth in the region. - Multi-Peril Crop Insurance (MPCI) is the dominant product type, accounting for over 62% of the market share in 2024. This type of insurance protects against a wide range of natural causes for revenue or yield loss. - In addition to federal programs, the U.S. government offers other crop subsidy programs like Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) to protect farmers from revenue losses due to price drops or yield fluctuations. Recent legislation has increased the premium support for the Supplemental Coverage Option (SCO), making it accessible to farmers in both PLC and ARC programs. - Globally, only a fraction of agricultural losses from climate-related events are insured. For example, in the European Union, just 20% to 30% of such losses are covered by insurance. This indicates a significant opportunity for market expansion as climate-related risks intensify.
