Addressing Physical Risks in Brazilian Agriculture: Priorities for Collective Action across Banks, Insurers and Capital Markets
Important: this Roundtable will happen inside the World Climate Summit COP31. To access you will need to register ALSO trough this link: https://bit.ly/WCSCOP31_In-Person
Physical climate and nature risks are already hitting Brazilian agriculture and the institutions that finance and insure it. Extreme events cost the sector around USD 2.2 billion per year. The May 2024 Rio Grande do Sul floods caused R$35.6 billion in direct damages. Forecasters expect the 2026/2027 El Niño to be among the strongest on record. The BCB estimates that 46% of corporate credit portfolios in Brazil sit with firms that are highly or very highly dependent on ecosystem services, with agriculture among the most exposed sectors.
Insurance is no longer absorbing this risk. Rural insurance penetration fell from around 17% in 2021 to around 3% today. When producers default, the loss moves to bank credit portfolios and to the Treasury through subsidised credit lines and debt renegotiation. No study has yet quantified how this cost splits across government, banks and insurers. Banks understand the risk, but few require insurance because it raises the cost of credit, especially for small producers. Banks and insurers are already acting on parts of this problem. Febraban is diagnosing data gaps in AdaptaBrasil with member banks and the BCB, with results expected by March 2027. CNseg, with FGV, has set out an agenda for the insurance sector in climate adaptation. It proposes a Climate Intelligence Hub that combines public climate data with insurers’ own claims and loss data, a modernised rural insurance stabilisation fund co-funded by the federal government, insurers and reinsurers, and parametric products built on INMET, INPE and Cemaden data.
On the regulatory side, the new GRSAC format enters into force in January 2027 and will require banks to report credit exposures by biome, while Susep Circular 666/2022 already requires insurers to manage climate risk. These efforts run largely in parallel. Banks and insurers draw on the same public data, face similar supervisory pressure, and hold different pieces of the same risk, but they rarely compare notes.
Capital markets are a growing part of the picture. A rising share of agricultural finance flows through CRAs (agribusiness receivables certificates) and Fiagro funds, which means physical risk already reaches investors, often without being priced. ANBIMA, which sets self-regulatory standards for these markets, is a natural partner to bring investors into the conversation.
This roundtable brings together Brazilian banks, insurers, reinsurers, capital markets participants and government officials, alongside Febraban, CNseg and ANBIMA, to test where collaboration adds most value and which priorities the sector should pursue next.