EIB-EC report urges new risk tools as Rs 2.55 lakh crore in annual losses go mostly uninsured

As climate extremes become the new norm, farmers across Europe are shouldering the brunt of rising losses — with up to 70 per cent of climate-related agricultural damages left uninsured, according to a new joint report by the European Investment Bank (EIB) and the European Commission.

The review, touted as the first comprehensive assessment of agricultural insurance across 27 EU member states, finds that Europe’s farmers are grappling with annual losses worth approx. Rs 2.55 lakh crore due to recurring droughts, floods, and hailstorms. Despite this, only 20–30 per cent of these damages are covered by insurance.

Without systemic action, the report warns, climate-induced losses could jump to 66 per cent of production value by 2050, up from 42 per cent today.

“Climate-related risks are creating enormous uncertainty in food production. Insurance and risk-reduction schemes are now essential to enable farmers to invest and adopt sustainable agricultural practices,” said EIB Vice President Gelsomina Vigliotti.

Released under the FI-Compass platform, with analytical support from Howden, the report recommends that EU member states overhaul their financial resilience strategies. Key suggestions include:

Developing catastrophe bonds and public-private insurance models

Creating rapid relief funds for climate emergencies

Integrating risk reduction schemes into national Common Agricultural Policy (CAP) plans

Banking sector may pull back from agri-lending

Christophe Hansen, the EU’s Agriculture Commissioner, flagged another looming threat: the banking sector’s potential retreat from agriculture due to growing credit risks. “If most of the losses are uninsured, banks may hesitate to lend,” Hansen warned. “I urge all member states to include new financial measures in their CAP strategic plans to proactively manage climate risks.”

This risk-averse trend could further squeeze the sector, limiting farmers’ access to capital – at a time when climate adaptation investments are more critical than ever.