LONDON Jan 16 Farmers have spent 20 percent
more on agricultural insurance in recent years to protect
against crop losses from increasingly frequent bad weather
events, according to reinsurer Swiss Re.
The rise in extreme weather disasters, such as the
widespread drought in the United States last year, has reduced
food output at a time when the world's population is expected to
grow by a third by 2050, the world's second biggest reinsurer
said in a report on Wednesday.
Global agricultural insurers took in $23.5 billion in annual
premiums in 2011, up by a fifth from 2005, in a market dominated
by emerging countries, Swiss Re said.
China and India accounted for nearly two-thirds of the $5
billion in premiums paid in emerging countries.
Government-backed initiatives to boost agriculture in
emerging markets have helped to increase crop values and
commodity prices - increasing the need for insurance, Swiss Re
Swiss Re said the agriculture insurance market could still
grow fourfold in emerging markets.
The reinsurer also called for "massive investment" in
agriculture to reduce hunger in a world struggling with high and
volatile food prices and said insurance was a way to introduce
private companies to the sector.
Global agricultural production must increase by 60 percent
to feed the world's population, which will reach 9 billion by
2050, the reinsurer said.
About 870 million people, or one in eight of the world's
population, are chronically undernourished, the United Nations
food agency said last year, while the UN Food and Agriculture
Organisation says the world needs to boost food output by 70
percent by 2050 to meet demand.
More insurance exposure in agriculture could lead to more
government-backed insurance programmes, such as microinsurance
schemes, which insures low-income people against specific perils
in exchange for premiums proportionate to the likelihood and
cost of the risk involved, the reinsurer said.
Poor governance, high levels of corruption and high taxation
of agriculture are among the many hurdles that reduce incentives
for financial backers to invest in the sector, a report from the
United Nations Food Agency said last year.