EU Report Urges Enhanced Insurance and Climate Adaptation to Mitigate €28 Billion Annual Losses in Agriculture

EU Report Urges Enhanced Insurance and Climate Adaptation to Mitigate €28 Billion Annual Losses in Agriculture

(IN BRIEF) The EIB and European Commission’s report reveals that the EU agricultural sector faces annual losses of more than €28 billion due to adverse weather, with potential increases of up to 66% by 2050 due to climate change. The report advocates for greater insurance coverage, including public-private risk-transfer measures, and calls for more adaptation efforts to reduce climate risks in agriculture.

(PRESS RELEASE) LUXEMBOURG, 21-May-2025 — /EuropaWire/ — A new report published by the European Investment Bank (EIB) and the European Commission highlights that the EU agricultural sector suffers more than €28 billion in losses annually due to adverse weather conditions, including droughts and floods. With climate change worsening, these losses are projected to rise significantly, with potential increases of up to 66% by 2050. The study underscores the urgent need for enhanced risk management strategies, including a broader expansion of farm insurance coverage to mitigate these growing climate-related risks.

According to the report, only 20% to 30% of climate-induced losses in EU agriculture are currently insured, through a combination of public, private, and mutual insurance systems, many of which are supported by the EU’s Common Agricultural Policy (CAP). The findings suggest that public-funded insurance coverage is more effective than government compensation programs and can provide crucial financial protection to farmers during climate-induced events.

The Need for Strengthened Risk Management Systems

EIB Vice-President Gelsomina Vigliotti emphasized the importance of mitigating climate risks in agriculture, stating, “Climate-related risks are an increasing source of uncertainty for food production. Mitigating these risks through insurance and de-risking mechanisms is essential to support the investments of European farmers.” She noted that the EIB’s future efforts will be guided by the findings of this report, which will shape the Bank’s strategies to strengthen the resilience of the EU’s agricultural system.

The EIB Group has already been supporting the agricultural sector through loans, guarantees, and equity stakes in agricultural businesses, as well as financing rural infrastructure such as irrigation systems and roads. Additionally, the EIB provides advisory services to public authorities and financial institutions on how EU farm grants can be leveraged to attract further funding and limit climate-related risks.

Call for Increased Insurance and Financial Instruments

Commissioner for Agriculture and Food, Christophe Hansen, commented on the findings, stating, “Climate change is restricting farmers’ access to finance, with banks becoming increasingly reluctant to take on risks. This study shows that only a fraction of climate-related losses are insured, and we need to expand this coverage to protect our farmers. I encourage all Member States to implement new financial instruments under their CAP Strategic Plans to address these risks.”

The report, the first of its kind to analyze agriculture-insurance schemes across the EU, was commissioned by the Commission’s Directorate-General for Agriculture and carried out by EIB Advisory under the fi-compass platform, with support from the global insurance intermediary group, Howden.

Rising Losses and Climate Adaptation Strategies

The study found that climate-induced losses in the EU agricultural sector total approximately €28.3 billion annually, equating to about 6% of the EU’s annual crop and livestock production. With global warming, these losses are expected to increase, with projections suggesting a rise of between 42% and 66% by mid-century. This volatility in agricultural yields and farm incomes poses significant challenges for the EU’s agri-food sector.

The report outlines key recommendations for addressing these challenges:

• The EU should pursue risk-transfer measures such as catastrophe bonds and public-private reinsurance arrangements to limit economic shocks for farmers.
• Rapid-response funding should be made available for disasters as they occur, ensuring timely support for affected farmers.
• Increased adaptation efforts are essential, as improving insurance coverage alone will not be enough to counter future climate risks. The sector must take proactive steps to adapt to changing climate conditions.

Background information  

EIB 

The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. The EIB finances investments in eight core priorities that support EU policy objectives: climate action and the environment, digitalisation and technological innovation, security and defence, cohesion, agriculture and the bioeconomy, social infrastructure, the capital markets union and a stronger Europe in a more peaceful and prosperous world.

The EIB Group, which also includes the European Investment Fund (EIF), signed nearly €89 billion in new financing for over 900 high-impact projects in 2024, boosting Europe’s competitiveness and security.

All projects financed by the EIB Group are aligned with the Paris Climate Agreement, as set out in our Climate Bank Roadmap. Almost 60% of the EIB Group’s annual financing supports projects that contribute directly to climate change mitigation, adaptation and a healthier environment.

In addition to financing, the EIB offers advisory services that help public and private partners develop and implement high-quality, investment-ready projects. In 2024 alone, EIB advisory teams helped mobilise over 200 billion of investment across Europe and beyond.

High-quality, up-to-date photos of the organisation’s headquarters for media use are available here.

About fi-compass

Delivered by EIB Advisory, fi-compass is a unique advisory platform established by the European Commission in partnership with the European Investment Bank (EIB). It is designed to support EU Member States and their managing authorities in the implementation of financial instruments under the European Shared Management Funds for Cohesion and Agriculture policy. The platform provides comprehensive guidance, practical know-how, and learning tools on financial instruments, helping to enhance the effectiveness and efficiency of public investments.

About Howden

Howden is a global insurance intermediary group with employee ownership at its heart. Founded in 1994, it provides insurance broking, reinsurance broking and underwriting services and solutions to clients ranging from individuals to the largest multinational companies.

The group operates in 55 countries across Europe, Africa, Asia, the Middle East, Latin America, the USA, Australia and New Zealand, employing 22,000 people and handling $45bn of premium on behalf of clients.

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SOURCE: European Investment Bank