Morocco: Crop sector needs customised insurance
Source: Middle East Insurance Review | Sep 2024
The Moroccan crop landscape may benefit from a tailor-made approach, supporting food production, social resilience and the economic sustainability of crop (re)insurance, according to a blog posted on Swiss Re’s website.
Morocco has become a hot spot for extreme weather-related events. The country regularly suffers from events such as floods and concurrent heatwaves and droughts that have caused severe water crises. As Morocco suffers another drought year in 2024, the agriculture sector is being hit particularly hard.
The authors of the blog said maintaining traditional indemnity-based scheme for stable production areas and offering a different type of crop insurance in highly vulnerable areas could be a solution for markets like Morocco.
A well-structured, transparent parametric approach could also bring value. For instance, it can help to a) maintain the insurability of highly vulnerable areas, b) support the transition to crops that are well suited to local agroecological conditions and c) improve the loss adjustment process.
Insurance payouts during the last decade have helped to increase the resilience of the farmers by partially compensating the incurred losses.
Agriculture insurance premiums are heavily subsided by the Moroccan government, especially for smallholder farmers. In recent years, primary crop insurance products have been adjusted to better reflect the current environment. However, the changes might be too costly for the farmers to sustain.
The Moroccan government has already taken many positive steps to support the sector. The reform of crop insurance schemes could also help maintain the insurability of highly vulnerable areas.
Representing 10% of Morocco’s GDP, agriculture employs a substantial portion of the country’s labour force in rural areas. Cereal crop production dominates Morocco’s arable land and it is heavily dependent on rainfall. More than 90% of the cultivated crops are grown under non-irrigated conditions. M