crop insurance payouts on the rise due to climate change

Crop Insurance Payouts on the Rise Due to Climate Change

Ever notice how the weather just doesn’t seem to cooperate anymore? Scorching droughts shrivel crops, while downpours turn fields into mud baths. These weather extremes, once outliers, are becoming the norm, wreaking havoc as Canadian farm insurance companies are facing a tough reality: crop insurance payouts are skyrocketing. Farm insurance, the financial safety net, meant to protect farmers from bad weather and pests, is straining under the weight of climate change.


Rising Costs, Rising Concerns

A recent report by the Canadian Broadcasting Corporation (CBC) highlights a concerning trend: crop insurance payouts in Canada are on the rise. Crop insurance is a financial safety net for farmers, protecting them from losses due to weather events, pests, and diseases. However, the increasing frequency and intensity of extreme weather events linked to climate change are straining these programs. 

The recent Saskatchewan budget documents reveal a significant impact of extreme weather on the province’s agriculture industry. Initially, the province projected a surplus exceeding $1 billion for the fiscal year ending March 31, 2024. However, due to unforeseen circumstances, the final budget released last month showed a complete depletion of the surplus, resulting in a deficit of approximately $482 million.

Guillaume Lhermie, director of the Simpson Centre for Food and Agricultural Policy at the University of Calgary, commented,

We are going to see more droughts, more pests, the yields won’t be as good. For me the question is, who should pay for that? I do foresee that government will be solicited more and more.

Climate’s Fury: More Extreme, More Expensive

Canadian Government Data: Crop Insurance Payouts

Canadian government data highlights a notable increase in crop insurance payouts over the past decade. In Saskatchewan, for example, payouts tripled between 2010 and 2020. These payouts are often triggered by extreme weather events such as droughts, floods, and heatwaves, which are becoming more frequent due to climate change.

Furthermore, the financial impact of these payouts is not evenly distributed across regions. While some areas experience more frequent extreme weather events, others are hit particularly hard by specific instances. 

In Saskatchewan, last year’s drought severely impacted crop production. Compared to the previous year, output decreased by nearly 11%. This led the provincial government to spend almost $1.2 billion more than budgeted through its Ministry of Agriculture to address the situation.

Climate Change

It is now expected that Canada’s warm winter weather may increase the frequency of wildfires in the province and surrounding areas. Snowpack, a key indicator of wildfire severity, is at a low level this year, causing concern among experts. Lower snowpack levels could lead to drier ground and an earlier start to the wildfire season.

Canadian Underwriter’s recent article on “How Canada’s winter weather predicts 2024 Cat claims” mentions that while climate change is causing Canada to warm at an alarming rate, some experts believe it could also reduce springtime flooding.

The problem is that less snowpack means the ground is generally drier and more flammable when wildfire season rolls around.  And after last year’s record wildfire season, Michael Galea, Sedgwick’s senior vice president of national operations, is wary about the 2024 year.

On the [west] coast, we are seeing very mild and dry conditions which [could lead to] a potential earlier start to wildfire season,

The rising cost of crop insurance payouts is impacting all stakeholders in agriculture. Farmers face financial insecurity due to increasingly common extreme weather events, and insurance companies struggle to balance affordable premiums with managing the significant increase in payouts.

In response to these challenges, Saskatchewan’s recent budget allocated $431.7 million this year for crop insurance and other farm risk management programs. This represents a 5.8% increase compared to the previous year and is a direct consequence of the province’s “challenging weather and soil conditions,” as stated by Finance Minister Donna Harpauer in her budget address. This increased funding aims to ensure these programs are fully equipped to support farmers in the face of a changing climate.

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Potential Solutions

The rise in crop insurance payouts presents a challenge for both farmers and insurance companies. Farmers face increasing financial insecurity as extreme weather events become more common. Insurance companies, on the other hand, are struggling to keep premiums affordable while managing the rising costs of payouts.


Several potential solutions can help address this challenge:

  • For farmers: Review their crop insurance limits to ensure they have enough coverage to recoup losses caused by severe weather events.
  • For insurance companies: Adjusting premiums based on risk assessments.
  • For insurance advisors: Exploring discount options to help with policy rate changes.


This surge in payouts is a clear sign that climate change is affecting Canadian agriculture. Here’s where you, the farmer, come in. The off-season is a perfect time to review your crop insurance coverage. Talk to your advisor, and make sure your policy reflects your needs. By taking charge now, you can ensure your farm is well-protected for whatever Mother Nature throws your way.

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