Agricultural Insurance Market Expected to Reach $67.4 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Agricultural Insurance Market," The agricultural insurance market size was valued at $38.5 billion in 2022, and is estimated to reach $67.4 billion by 2032, growing at a CAGR of 5.8% from 2023 to 2032.

The agricultural insurance operates as a safeguard against the uncertainties that commonly impact crop output due to adverse weather conditions, as well as threats posed by insects and diseases. The agricultural insurance is designed to protect farmers during cultivation by offering protection against losses stemming from unforeseen and natural circumstances that are beyond their control. Referred to as crop insurance, agricultural insurance is crucial for farmers and agricultural producers to mitigate a range of risks. This coverage extends to potential crop losses, reduced yields, fluctuations in agricultural insurance market prices, and occurrences of natural disasters such as floods and droughts.

The demand for agricultural insurance is driven by many factors such as dependency of farmers on weather-based conditions for rain, frequent price fluctuations in agricultural crops due to various factors, globalization of agriculture due to which need of preserving crop produce to book higher profits, various risks due to climate change, and frequent occurrence of plant diseases. Farmers all around the world are keen to get insurance for their crops and other related activities and feel secure due to the frequent occurrence of these events.

Hence, the demand for agricultural insurance is surging to a record high. Plant diseases can be caused by a variety of agents, such as bacteria, viruses, fungi, nematodes, and parasitic plants. This creates a huge demand for crop insurance in order to safeguard farmers’ produce from various frequently occurring diseases and prevent heavy losses.

Despite the essential role of agricultural insurance in mitigating risks for farmers, there exist significant challenges within the market. The combination of frequent and severe risks, along with limited actuarial data, results in relatively high premium costs that many farmers find unaffordable. Even with government subsidies, premiums often remain prohibitively high. Introducing deductibles as a means to reduce premiums further diminishes the attractiveness of these insurance products. Consumers, including farmers, naturally evaluate the cost of a product against the expected benefits it offers. These factors are anticipated to restrain the agricultural insurance market growth in the upcoming years.

The evolution of smart and interconnected end user applications within the agricultural insurance market can be linked back to electronic banking, facilitating quicker insurance payouts and diminishing the risk of fraud. The advent of widespread mobile phone usage has further revolutionized the sector, enabling insurance providers to broaden their offerings to previously underserved demographics, particularly smallholder farmers who were traditionally excluded from insurance coverage due to various factors, such as the perceived higher risks associated with their farming practices, limited access to financial services, or the unavailability of insurance products tailored to their specific needs. An illustrative example lies in the approach of index insurance providers like ACRE Africa, Pula, and OKO. Through non-smartphone mobile communication channels, they effectively register and engage with customers.

Notably, certain services leverage location-based technologies to map agricultural plots, thereby matching them with locally available index insurance products, thereby minimizing basis risk. The utilization of mobile money further streamlines the process, facilitating the collection of premiums and digital claims disbursement. This digital transformation marks a significant stride in encouraging farmers and enhancing the accessibility and effectiveness of agricultural insurance solutions.

The Agricultural Insurance market share is segmented on the basis of product type, distribution channel, and region. By type, it is classified into multi-peril crop insurance (MPCI), crop-hail insurance, livestock insurance, and others. By distribution channel, it is classified into banks, insurance companies, and others. By region, the agricultural insurance market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

The key players profiled in the agricultural insurance market analysis report Great American Insurance Company Agriculture Insurance Company of India Limited (AIC), Allianz SE Reinsurance, Munich Re Group, Chubb, Sompo International Holdings Ltd, Zurich, AXA, People's Insurance Company (Group) of China Limited, and QBE Insurance Ltd.

The report offers a comprehensive analysis of the global agricultural insurance market trends by thoroughly studying different aspects of the market including major segments, market statistics, market dynamics, regional market outlook, investment opportunities, and top players working towards the growth of the market. The report also highlights the present scenario and upcoming trends & developments that are contributing toward the growth of the agricultural insurance market. Moreover, restraints and challenges that hold power to obstruct the market growth are also profiled in the report along with the Porter’s five forces analysis of the market to elucidate factors such as competitive landscape, bargaining power of buyers and suppliers, threats of new players, and emergence of substitutes in the agricultural insurance market.

Impact of COVID-19 on the Global Agricultural Insurance Industry

• The pandemic prompted companies to embrace advanced techniques for evaluating the impact on farmers, employing technologies like drones, satellite imagery, and cloud computing, among others.
• The pandemic did not lead to any significant changes in farmers' behavior when it came to their adoption or purchase of crop insurance.
• The pandemic led to an increase in digitization of insurance services and operations, utilizing mobile phone apps and other digital platforms.
• The agricultural insurance market experienced a notable impact due to the COVID-19 pandemic. Lockdown measures confined agriculture producers to their homes, making it difficult for companies to assess on-site losses suffered by farmers.

Key Findings of the Study

• Based on product type, the multi-peril crop insurance (MPCI) sub-segment emerged as the global leader in 2022 and is anticipated to be the fastest-growing during the forecast period.
• Based on the distribution channel, the banks sub-segment emerged as the global leader in 2022 and is predicted to show the fastest growth in the upcoming years.
• Based on region, North America registered the highest agricultural insurance market share in 2022 and Asia-Pacific is anticipated to generate the maximum revenue during the forecast period.