French crop insurance reform (2023)
A French reform effective in 2023 that splits crop losses into three layers: the farmer, subsidized insurance, then national solidarity for catastrophic losses.
Law no. 2022-298 of 2 March 2022, effective 1 January 2023, replaced the agricultural calamities scheme, which compensated certain crops outside any insurance, with a three-layer structure. Routine losses remain with the farmer. Intermediate losses fall to multi-peril crop insurance, whose premium is subsidized by public funds, European and national, up to a cap set by EU law. Catastrophic losses, above a threshold that varies by sector, are borne by the state as the national solidarity indemnity, including for uninsured farmers, but at a lower rate so as to make insurance more attractive than abstention. The insured farmer deals with a single point of contact: the insurer, as approved intermediary, pays both the insurance indemnity and the public share. A co-reinsurance group among insurers pools data and risks. The reform answers the central difficulty of crop insurance, spatial correlation: the state keeps the tail of the distribution that the market cannot carry alone. Its success criterion is insurance take-up, historically low outside arable crops, notably in grassland and fruit growing.
After the April 2021 spring frost, which destroyed up to 90 percent of certain French vineyard harvests for an estimated cost of more than 2 billion euros, this new regime replaced the disaster relief scheme: an insured fruit grower receives the contractual indemnity on the intermediate layer, then the national solidarity indemnity above the sector's catastrophic threshold, while an uninsured neighbor receives only the latter, at a reduced rate.
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