Asia Pacific crop insurance market set to overtake US
Source: Middle East Insurance Review | Oct 2020
The rise in digital initiatives for crop insurance and supportive government initiatives such as subsidies drive the growth of the global crop insurance market. US-based Allied Market Research (AMR) said in its latest report that the crop insurance market is expected to grow to $53.02bn globally by 2027, at a 6.1% CAGR.
However, the high cost of premiums and lack of awareness among farmers hinder market growth. On the other hand, untapped potential in emerging countries and expansion of services will create new opportunities in the coming years.
The demand for crop insurance has grown during the COVID-19 pandemic, due to disrupted supply chains and the impact on crop revenue in countries such as India and Brazil. Owing to the scarcity of labourers for harvesting and other activities, crop production activities have been hampered, which in turn, raised the need for crop insurance.
This has also raised the need for reformation of a regulatory framework to overcome challenges faced by insurers and policy adopters.
The multiple peril crop insurance (MPCI) segment will maintain its lead in market share through to 2027, said AMR. Based on coverage, the MPCI segment contributed to the largest share in 2019, accounting for more than two-thirds of the global crop insurance market, and is projected to maintain its leadership status during the forecast period.
Moreover, this segment is estimated to witness the highest CAGR of 7.1% from 2020 to 2027. This is due to its offering of a combination product along with perils covered by the standard loss of yield coverage under the crop insurance policy.
North America accounted for the largest share of more than two-fifths of the global crop insurance market in 2019 and is expected to continue its lead status by 2027. This is due to farmers and ranchers in the US striving to maintain economical crop production by acquiring crop insurance coverage. However, Asia Pacific is expected to witness the highest CAGR of 7.9% from 2020 to 2027, owing to rise in agricultural production activity and adoption of advanced technologies in the region. M