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Advantages of the Spanish agricultural insurance system

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The Spanish agricultural insurance system is one of the most comprehensive and advanced in the world. Below the most significant advantages provided by this system for the main stakeholders are listed.

  1. From the perspective of public administrations:

  • The existence of support through agricultural insurance is an alternative to the granting of aid in case of exceptional or catastrophic weather events. This support is much more rational as it applies technical criteria when assessing damages, and is significantly cheaper because it is directed only at those willing to take out insurance.

  • It also involves producers in the financing process, through the payment of the premium, and also through the application of deductibles in case of a claim, which again results in a significant cost saving for the Public Administration.

  • Not only does it reduce financial costs, but it has a distinct advantage from a political perspective, as the criteria for granting compensation are previously and contractually established by all parties.

  • The public subsidies can be budgeted a priori, and moreover, it becomes fixed, eliminating uncertainty and deviations on estimates, which are assumed by the insurer through the payment of indemnities.

  • Finally, it ensures there are no management overlaps by Public Administrations when catastrophic weather events occur.

  1. From the perspective of the producers:

  • They receive compensation adjusted to the economic damage suffered which responds to the contractual cover.

  • The payment of compensation is always less than 60 days from harvest or from the end of guarantees.

  • It allows them to maintain their level of income and therefore the continuity of their operations.

  • It strengthens their financial solvency when faced with financial institutions and individuals.