Severe and persistent weather events in southern Spain have added pressure to the country’s agricultural insurance framework while leaving private insurers largely insulated from material losses, credit ratings agency Morningstar DBRS said.
Morningstar DBRS highlighted in its latest review that Andalusia has a rating of A (high), with stable trends but affected by weeks of extreme weather caused by storms Leonardo and Marta. The storm brought record rainfall, widespread flooding, landslides and evacuations, disrupting economic activity in the region and severely affecting the agricultural sector, according to the agency.
Morningstar DBRS pointed out that due to continuous rainfall, large areas of farmland were flooded and crops were destroyed. Citing information from the Andalusian regional government and COAG, one of Spain’s main farmers’ unions, the agency said that about 20% of Andalusia’s total agricultural output has been affected.
Winter vegetables, citrus groves and vineyards are the most affected, with potential losses estimated at more than €3 billion. In addition, Morningstar DBRS expects further losses of around €100 million to property, vehicles and individuals.
Morningstar DBRS explains that Spain’s Seguro Agrario Combinado (SAC) was established in 1980 as a joint public-private insurance mechanism in which multiple private insurance companies jointly underwrite agricultural and livestock risks. The agency stressed that coverage is standardized but calibrated to reflect crop characteristics and geographic risks, with premiums determined by underlying risk profiles. It also noted that national and local governments are offering subsidies to ensure producers can still use the system.
According to Morningstar DBRS, the state-owned Consorcio de Compensación de Seguros plays a key role in this framework. CCS assumes a fixed 10% quota share of each SAC policy and provides excess loss reinsurance protection to private co-insurers, thereby enhancing the system’s resilience against catastrophic events. The agency further noted that Agroseguro is the entity that coordinates insurance companies within the SAC structure and, as of the end of 2024, was mainly owned by Caser SA (21%), Mapfre SA (18%), Agropelayo SA (14%), Seguros Generales Rural SA (13%) and Allianz SA (8%).
“Insured losses will likely be borne by SACs or Consorcio de Compensación de Seguros (CCS),” added Mario De Cicco, vice president of Global Insurance and Pensions Ratings at Morningstar DBRS. “As such, we believe the impact on private insurers will be negligible.”
Morningstar DBRS reports that total claims paid by Agroseguro reached €804 million in 2025, a 13% increase on the previous year and the second-highest annual level in the past decade. The agency observed that losses in 2023 alone amounted to €1.241 billion, mainly due to severe drought. Specifically, in Andalusia, claims totaled €63.4 million in 2025, up 40% year-on-year, and Morningstar DBRS expects claims to increase further in 2026 as the impact of recent storms becomes apparent.
Morningstar DBRS acknowledged an increase in claims in 2025 compared with 2024, but said it was broadly consistent with the five-year average. Nonetheless, the agency warned that the increasing frequency and severity of extreme weather events was putting upward pressure on SAC’s loss experience and the reinsurance support provided by CCS.
It added that this pressure was partly mitigated by continued growth in premium volumes, which have continued to expand over the past decade and exceeded €1 billion for the third consecutive year in 2025, reaching €1.029 billion, compared with €673 million in 2016.
In addition to agricultural losses, Morningstar DBRS assesses that flooding and damaging winds associated with storms Leonardo and Marta are special risks under the Spanish insurance system. Therefore, insured losses resulting from these events are expected to be borne by SAC or CCS. The agency concluded that both mechanisms maintained adequate loss-absorbing capacity, providing substantial buffers and protecting private insurers from significant financial stress.
Overall, Morningstar DBRS believes that while extreme weather is increasing pressure on Spain’s agricultural insurance system, the country’s existing public-private structures continue to protect private insurers from unusual losses while ensuring coverage for affected sectors.
