The new one has been active in Italy since 1 January 2023 Agri-CAT National Mutual Fund, established for the coverage of catastrophic damage meteorological and climatic effects on agricultural production.
The Agri-CAT fund provides for the provision of compensation to farmers who have suffered damage to their crops as a result of a catastrophe event from flood, frost or frost, drought.
Introduced by the reform of the common agricultural policy (it is an instrument provided for by the National Strategic Plan of the CAP 2023-2027), it will be financed with 350 million euros per year, collected in part with one withholding of 3% on direct aid received by farmers and partly covered with an additional contribution from the European Agricultural Fund for Rural Development (EAFRD).
How does the Agri-CAT Fund work?
The basic mutual coverage guaranteed by the Fund is extended to all agricultural companies receiving direct payments: every year, when submitting the Single Application for access to direct payments from the CAP, the farmer signs the application for participation in the Fund and for participation in mutual coverage.
The farmer who believes he has suffered damage to his agricultural production, higher than the 20% of its historical average production, must submit a accident report to the Fund through the appropriate application.
The accident reports received are then subjected to:
1. verifies that the plots declared by the farmer as affected by a catastrophic event fall into areas actually affected by the event (exceeding threshold values, the so-called “triggers”);
2. damage estimate and subsequently quantification of financial compensation.
Estimates of damages to be borne by the Fund are made on the basis of insurance reports (for farmers who have signed up for a subsidized policy with catastrophe coverage - CAT policy) or by referring to a percentage of average areal damage determined by the Fund Manager on the basis of sample assessments carried out for homogeneous areas (for farmers who have not taken out a CAT policy).
Agricultural catastrophe insurance: how do others behave?
On the basis of Drought before and of extreme weather events, in all the main world agricultures we are witnessing a breakthrough on the topic of insurance policies, although only in a few cases is a form of insurance coverage against catastrophe events similar to that recently introduced in Italy.
Spain and drought damage
There Spain has already launched a package of measures to counteract the damage of drought with a budget from 636 million, which will be provided in the form of direct aid to support the incomes of damaged farmers. Furthermore, Spain, like Italy, increased up to maximum allowed by EU rules on State aid (the 70%) the public contribution rate on the cost of insurance policies.
France increases its budget
In France, the Government has made policies available to farmers to incentivize 600 million euros with already the clause, where necessary, to raise the budget to 800 million.
The United States and the Farm Bill
Finally the United States, that already in early 2000s have transformed their agricultural policy, the Farm Bill, from one system of production subsidies to one based on insurance policies. With the new programming the endowment should pass from 200 to 438 billion dollars in 5 years.
In the USA, insurance policies cover both damage from atmospheric events, which economic difficulties.
Risk management: new good practices
The climate change is therefore having a significant impact on the risk management system in agriculture, in Italy and in the world, inducing on the one hand new agronomic practices and, on the other, bringing out new systems for estimating agricultural damage.
These are "lighter" estimating systems with a higher technological content, especially of satellite origin, which act in a complementary and synergistic manner with respect to field reports.
TETHYS provides an important contribution in this sense: with updated calculations on the status of crop health It is on volume of agricultural production over the course of the season, supports i insurance adjusters, The farmers and the public administrations for a process transparent and objective estimate of damage from adverse atmospheric events.
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