Can we assess and quantify the possible impacts of climate change on crop yields? Are backward-looking views still representative in a warmer world? How shall the crop re/insurance industry react to the changing environment? 

In a world where the Paris Agreement climate targets need to be achieved, our research attempts to answer these questions through the lenses of crop re/insurance. State-of-the-art crop growth models are used to translate a range of physically plausible, forward-looking climate scenarios into crop yield outcomes in Europe. The approach enables the quantification of climate-related changes in the frequency and severity of yield distributions caused by the jump from the 1.0°C to 1.5°C level of global warming above pre-industrial levels.  

The findings of this report show significant climate impacts on crop yields in Europe even if CO2 neutrality and global temperature stabilization to 1.5°C are achieved, thus stressing the urgency for stringent reductions in greenhouse gas emissions and more rapid advances in energy transition. Furthermore, the results imply that in a changing climate, elementary risk management tools - like insurance - are becoming more and more relevant. This research also provides quantitative evidence to challenge the representativeness of yield distributions generally used by the industry in costing crop re/insurance products and that they likely tend to underestimate risks. 

We propose targeted calls-to-action for agri re/insurers that can

1. help proactively manage climate risks in agriculture,
2. improve actual vs expected loss ratios and portfolio performance and
3. strengthen the security and resilience of the food system.

Finally, the report acknowledges the role of the re/insurance industry in supporting agricultural adaptation strategies that have the potential to partially mitigate climate-driven crop yield losses.

Source - www.swissre.com