Nine insurance companies offer agricultural insurance products in Brazil. All of them are private companies.
Agricultural insurance was introduced in Brazil in 1955 by the Companhia Nacional do Seguro, a public insurance company that operated until the mid-1990s. In 1998, private insurance companies started to offer hail crop insurance for fruits in southern Brazil.
The delivery channels depend on the line of business.
Government support to agricultural insurance Type
Crop
Agricultural insurance delivery channels
Since 2005 the federal government has been subsidizing agricultural insurance premiums. Some subnational For MPCI the main governments, like São Paulo, delivery channels have started to complement are banks, financial federal government The main insurance institutions, subsidies. company is closely cooperatives, and related with the input suppliers. Federal government national bank and subsidies range from 30 accounts with 51% In the case of to 60% of the premium, of total market hail insurance depending on the crop and premiums. and forestry, state of the federation. bloodstock, and The federal budget for The other four livestock insurance, agricultural insurance Then in 2003 companies compete retail brokers are subsidization in 2009 was the companies for the remaining the main channel. US$149 million, which, in expanded their market. addition, is complemented line of business to The federal by approximately US$15 multi-peril crop Two companies government million financed by state insurance (MPCI). offer livestock also supports governments. and bloodstock agricultural This market is insurance. insurance by Federal government growing rapidly, sharing part of manages this subsidy thanks to financial Five companies offer the catastrophic scheme through the Ministry support from the forestry insurance. risk faced by of Agriculture but does not federal government Two of these work agricultural establish the criteria for as well as many exclusively with production in a granting subsidies. state governments. this product on a special PPP fund facultative basis. created with this The federal government Although far to objective, the also supports agricultural reach maturity, 100% of the Rural Catastrophe insurance by sharing part of this market is the agricultural Fund (Fundo de the catastrophic risk faced third agricultural insurance business Catastrofe Rural). by agricultural production in insurance market in Brazil is reinsured This fund provides a special PPP fund created in Latin America with international stop-loss coverage with this objective, the Rural and has enormous reinsurers and the to private insurance Catastrophe Fund (Fundo de growth potential. local reinsurer, companies offering Catastrofe Rural). This fund the Brazilian agricultural provides stop-loss coverage Crop insurance Reinsurance insurance. The to private insurance is the main Institute (IRB). fund is financed companies offering agricultural with contributions agricultural insurance. insurance product from the insurance The fund is financed with and accounts with industry, the contributions from the 92% of premiums. government, insurance industry, the the IRB, and government, the IRB, and international international reinsurers. reinsurers.
Market structure
Named-peril MPCI
Market status
Original gross rates for individual MPCI vary from 2 to 8% of the total sum insured for coverage levels of 50% of APH and from 4 to 10% for coverage levels of 70% of APH. Original gross rates vary, depending on the crop and the region.
Covered risks are fire, lighting, drought, floods, excess rain, freeze, excessive heat, and wind. Pests and diseases are totally excluded.
Guaranteed yields covered vary from 50 to 70% of the actual production history (APH), depending on the crop, region, and guaranteed yield. These products are linked to bank or input supplier loans.
3. Forestry insurance: Low penetration. Only 68,000 hectares out of 5 million forested hectares (less than 2%) are insured.
2. Livestock insurance: Low penetration. Only 51,000 head of cattle are insured, which represents less than 1% of the national herd.
1. Crop insurance: Low penetration, but the adoption rate is growing rapidly. In 2009, 6.7 million hectares (10% of cultivated area) were insured. According to information collected for the study, 72,000 insurance policies were issued in 2009.
Named-peril policies are offered for crops, vineyards, fruit plantations, and vegetable crops in Rio Grande do Sul, Santa Catarina, Paraná, and São Paulo states. Hail is the basic covered peril, but for some crops and plantations, freeze or excess rain can also be selected. Original gross rates vary from 6 to 9% of the total sum insured, depending on the deductible level, the type of crop, and the region. For this coverage, a minimum deductible of 20% applies. MPCI policies are offered for soybean, corn, corn double cropped, peanut, sugarcane, and wheat crops in the states of São Paulo, Mato Grosso, Mato Groso do Sul, Goias, Bahia, Minas Gerais, Tocantins, Maranhao, Paraná, Santa Catarina, and Federal District.
Penetration rate
Features
Agricultural insurance products
Table A.3 Agricultural insurance country fact sheet: Brazil
255,900,000
5,806,000,000
Liabilities
Market volume (US$) Premiums
98 ] Agricultural Insurance in Latin America