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Climate Change Poses Growing Challenges for Brazilian Rural Insurers


Fitch Ratings-Rio de Janeiro/New York-29 June 2022: Rural insurance in Brazil has seen a rapid acceleration in premium growth for property/casualty insurers, as it has become an increasingly important tool used by agricultural producers to mitigate the growing frequency and severity of extreme weather events that can pressure production levels and profitability, Fitch Ratings says.

Results are expected to remain pressured in the near term amid higher inflation, as the potential for increased extreme weather events may continue to put upward pressure on the sector’s loss ratios. Higher rural insurance losses can also influence insurers’ reinsurance costs, given the higher rates and deductibles and lower appetite for contracts. Additionally, the inclusion of greater probabilities of extreme weather events in the pricing of these risks by insurers may increase the cost of insurance for rural producers, underscoring the importance of risk management and the impact that climate change can increasingly have on the segment.

Agricultural insurance is the second largest non-life insurance segment in Brazil after auto insurance, accounting for nearly 11% of sector premiums. It is a risk-management tool that provides rural producers coverage for damages and losses caused to crops resulting from unforeseen climatic events, including flooding, drought, frost and […]

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