Choosing a Climate or Parametric Insurance
From Triple Performance
Parametric insurance, also called index insurance, is a new type of coverage based on weather data. These insurance solutions allow securing farmers' incomes as soon as a weather anomaly is detected (based on a rainfall index or other selected criteria).
Choosing between climate insurance or parametric insurance
The first step is to clearly define your need:
- What risks am I trying to cover?
- What are my productions?
- What capital do I want to cover?
Choosing between multi-risk climate insurance and index insurance
MRC Insurance (Multi-risk climate)
Advantages and disadvantages
Advantages:
- subsidized (see this document on agriculture.gouv.fr specifying the subsidy terms)
- Inexpensive
- Covers many crops
Disadvantages:
- Does not reimburse very well
- Presence of a deductible
- Requires an expert assessment to trigger reimbursement
- Obligation to cover a minimum area of the farm
- Reference index: yield over the last 5 years of the farm (Olympic average) --> not suitable for farms in transition
Index insurance
Generalities
Generally, they trigger based on the value of any index that can be measured objectively:
- Temperature (either upon reaching a threshold (frost) or on repeated temperature over several consecutive days)
- Wind
- Precipitation
- Sunshine...
There is no index that protects against an pest attack (disease, weeds or insects).
They can be negotiated directly with farmers, through brokers, or via cooperatives.
Advantages and disadvantages
Advantages:
- Can cover a single plot
- Suitable for specific crops with a well-identified risk
- You can precisely choose the capital you want to cover
- Automatic triggering
- Triggering based on Météo-France data or use of connected weather stations if the farm is in a microclimate
Disadvantages:
- Requires a good understanding of production parameters and agreement with the insurer to clearly identify risk periods and the correct trigger threshold
- Not subsidized
- More expensive
- Less developed offer among insurers and less generalist
Annexes
Annexes and references
- https://agriculture.gouv.fr/la-gestion-des-risques-en-agriculture Risk management in agriculture (government information site)
- https://agriculture.gouv.fr/telecharger/87233 Official document specifying subsidy terms for multi-risk climate insurance
- https://www.pleinchamp.com/actualites-generales/actualites/comparatif-trouver-l-assurance-climatique-adaptee-a-ses-besoins PleinChamp: Comparison: finding the climate insurance adapted to your needs
- https://www.terre-net.fr/assurances/t153 List of Terre-Net articles on insurance issues
- https://www.terre-net.fr/meteo-agricole/article/damien-collignon-l-assurance-aleas-climatiques-devrait-etre-obligatoire-2179-136922.html Feedback: Damien Collignon: "Climate risk insurance should be mandatory"
- https://wikiagri.fr/articles/cultures-lassurance-parametrique-assure-presque-tout-et-pour-moins-cher/14536 WikiAgri Crops, parametric insurance covers almost everything and for less
