Owner in the municipality of Itaí, in the southwest of the state of São Paulo, Luiz Fernando experiences the damage caused by climate change and the intensification of extreme phenomena: last year, hail damaged his soybean plantation, and this year, frost devastated the wheat crop.
On both occasions, relief for the agronomist — and for the ten employees who work on his farm — came from rural insurance, a mechanism that compensates producers for losses in incidents, including weather events.
“Our group has been working with rural insurance for a few years and last year we had hail in the soybean crop. The damage was over 45% and all the procedures were carried out, and the insurance covered our losses”, he says.
“This year we had the advent of frost on wheat, and the damage was 65%. The technical team came to evaluate our crop and we were able to continue our activity to prosper.”
It turns out, however, that the intensification of extreme events on the planet, driven by climate change, puts the balance of the rural insurance business at risk.
The logic of the mechanism is as follows: producers contract protection and gain predictability to run their production and make money; Meanwhile, insurance companies profit as the amount paid by the client upon contracting is normally higher than the compensation.
Everything changes with climate change and more frequent disasters: compensation increases, and insurance companies need to charge producers a higher premium.
To give you an idea, the number of droughts, floods and other extreme weather events in Brazil went from 639 in 2003 to 6,772 in 2023 — a jump of 960% — according to a survey by Fiocruz (Fundação Oswaldo Cruz).
CNseg (National Confederation of Insurance Companies), the main entity that represents the segment in the country, calculates that between 2022 and 2024 the losses caused by climate events in Brazil totaled R$180 billion, with half of the value concentrated in agribusiness.
This means that rural producers accumulated losses of R$30 billion per year. The explanation for this concentration lies in the nature of the incident in the countryside, according to Glauco Toyama, president of the Rural Insurance Commission of FenSeg (National Federation of General Insurance).
“What is important in this whole story when we talk about rural insurance, especially agricultural, it in itself brings about a difficult environment, because it does not affect a single property. In the case of automobiles, when we have an accident, it happens with one, two, three cars. In the case of rural insurance, it affects a series of properties”, he states.
Solutions and COP30
Although agriculture concentrates a large part of the losses caused by disasters, less than 5% of the planted area in Brazil today has rural insurance — around 4 million hectares of the country’s 97 million hectares are covered.
This coverage reached 16% in 2020 and has been falling. In the United States, another global agribusiness giant, for example, protection is around 60%.
According to industry members, possible solutions to this new dilemma include: increasing climate prediction technologies in order to make insurance more assertive; strengthen the role of reinsurers (the companies that insure insurers); and expand the number of producers who adhere to this instrument.
“The insurance sector carries out studies on these events. How are we going to insure these events? On the other hand, the greater the scope, the cheaper it is on average. If it focuses too much, on very high risk, the cost of insurance will be higher. In this, government participation is fundamental, creating solutions that involve the public and private sector”, said Dyogo Oliveira, president of CNseg.
One of the insurers’ main requests to the public sector is to free rural subsidy resources — money paid by the government that helps make insurance viable — from public spending contingencies.
In 2025, of the total R$1 billion in the Brazilian budget allocated to the program, half was frozen. Thus, the figure was even further away from the agribusiness demand, which is R$4 billion.
To take forward a complex debate on different fronts, insurance companies gained an “arena” in 2025. Brazil hosts COP30, the United Nations climate conference, this month. And in Belém, the segment’s dilemmas became a topic of discussion among businesspeople and authorities from around the world.
“COP30 brings more balance to the climate discussion, which has always been very focused on mitigation, and there has not been as much attention to adaptation. This is where the issue of insurance and the protection gap comes in. We need to expand protection especially in developing countries”, added Dyogo Oliveira.
