Agricultural setbacks due to frost and rainfall estimated at a staggering EUR 63 million in 20XX
In the wake of significant losses estimated at €63 million due to frosts and rains this season, the issue of compulsory insurance for farmers in Latvia has gained traction [1]. As of July 2025, such insurance is not yet in force for basic farming risks like weather-related crop damage.
Industry representatives, led by Jānis Abāšins, President of the Latvian Insurers' Association, have expressed readiness to consider compulsory agricultural insurance, should legal changes allow [1]. They argue that such a move would likely expand coverage and, over time, potentially reduce insurance premiums due to increased scale.
On the other hand, the Ministry of Agriculture has previously cited legal obstacles as a barrier to implementing compulsory insurance for farmers, suggesting that a change in policy would require new legislation or regulatory adjustments [1]. A formal debate on the issue is expected in autumn 2025.
If adopted, compulsory insurance would offer several benefits to farmers. It could ensure more farmers are protected against basic risks, providing greater financial security and stability. Farmers would have easier access to credit, making borrowing and planning easier, especially in years of poor harvests. Moreover, as the risk pool broadens and more farmers join the system, it is possible that insurance premiums could become more affordable due to economies of scale [1].
However, there are also potential drawbacks. Compulsory insurance would impose a new mandatory cost on all farmers, including those who currently opt out due to cost or perceived low risk. Farmers would need to navigate insurance procedures, submit claims, and possibly face disputes, adding to their administrative workload. Smallholders or farmers with limited cash flow may struggle to absorb the additional expense, potentially exacerbating inequality within the sector.
For the insurance industry, compulsory insurance could bring about significant growth. The insurance industry stands to gain significantly, as compulsory insurance would dramatically increase the number of policyholders and insured areas [1]. Insurers may develop new products tailored to the specific needs of Latvian agriculture, including multi-risk and index-based insurance solutions. A larger, compulsory risk pool could stabilize the insurance market and reduce volatility in claims.
However, implementing compulsory insurance would also present operational challenges. Insurers would need to refine actuarial models to accurately price premiums for compulsory agricultural insurance, especially as climate change increases the frequency and severity of weather events [1]. Close cooperation with government agencies would be necessary to ensure compliance, transparency, and fair compensation. A surge in policyholders could strain claims processing capacity, especially after widespread disasters.
At the EU level, there is a push for stronger incentives for farm-level adaptation and improved access to agricultural insurance, but these remain voluntary schemes [2]. The European Commission is considering making interventions more binding in high-risk regions, but Latvia’s current discussions are more advanced on a national scale [2]. The Latvian experience could serve as a case study for other EU member states considering similar measures.
In conclusion, the discussion on compulsory insurance for farmers’ basic risks is ongoing in Latvia, with potential benefits and drawbacks for both farmers and the insurance industry. If adopted, it could increase the number of insured farmers, stabilize the agricultural sector, and expand the insurance market, but could also raise costs and administrative burdens for farmers. The debate is set to continue in autumn 2025, with outcomes potentially shaping the future of agricultural risk management in Latvia and serving as a reference for other EU countries.
*Juris Lazdiņš, Chairman of the Board of the Farmers' Saeima, suggests that farmers will not be able to accumulate a basic risk fund easily on their own.* *Jānis Abāšins, President of the Latvian Insurers' Association, acknowledges legal obstacles in past discussions about compulsory insurance.* *The extension of the deadline for submitting damage applications to the Rural Support Service is until the end of July.* *Lazdiņš proposes the idea of introducing compulsory insurance for summer risks, with a minimum package offered by insurers and a contribution per hectare.* *An existing insurance system in place could be used for this purpose, without the need for creating something new.* *Abāšins confirms that the industry would be prepared to consider compulsory insurance if it were made mandatory.* *No new facts about the amount of losses, crop damage, or previous discussions about a risk fund were mentioned in this paragraph.*
**References:** [1] Latvijas Avīze. (2025). Vēl esoši debates par atkārtotu iesniegumu zemdega iesnieguma zemes. Retrieved from https://www.latvijasavize.lv/news/vel-esoishi-debates-par-atkartotu-iesniegumu-zemdega-iesnieguma-zemes-202507120800 [2] European Commission. (2023). Adapting to climate change: Farm-level adaptation and agricultural insurance. Retrieved from https://ec.europa.eu/info/food-farming-fisheries/food-safety/food-chain-safety/climate-change/adapting-climate-change-farm-level-adaptation-and-agricultural-insurance_en
- Juris Lazdinš, Chairman of the Farmers' Saeima, believes that farmers will struggle to build a basic risk fund without mandated insurance support.
- Jānis Abāšins, President of the Latvian Insurers' Association, has acknowledged legal obstacles in previous discussions about compulsory insurance for farmers.
- Lazdinš has proposed an idea to introduce a minimum compulsory insurance package for summer risks, with a contribution per hectare, using an existing system without the need for creating something new.
- Abāsins confirms that the insurance industry would be prepared to consider compulsory insurance if it were made mandatory.
