The subsidy-mosaic for agricultural weather insurance in Germany

The subsidisation of agricultural weather insurance is gaining momentum in European agriculture, with the aim of increasing farmers' self-responsibility and eliminating the need for ad hoc disaster payments. The implementation and design of agricultural weather insurance subsidies vary considerably from country to country. We show here that in Germany there are even fundamental differences within the country due to the different weather insurance subsidy schemes of the federal states. For example, some federal states do not subsidise weather insurance, and other federal states that do subsidise weather insurance, differ in which crops or perils are supported. This insurance subsidy mosaic increases inequality across farms and is likely to increase the cost of insurance. In addition, small federal-state-specific insurance markets are less attractive to insurance companies, which has a negative impact on competition among insurance companies and innovation in insurance products. We conclude that harmonised approaches to insurance support that incentivise on-farm risk management and adaptation to climate change are needed.