The German Parliament last week published in its Federal Law Gazette a law to reduce the insurance premium tax applied on drought insurance from 19% to 0.03%. The reduction brings the rate for drought insurance in line with tax rates for other agricultural risks, such as hail, frost, and flood damage.
Discussions in Parliament touched on the fact that insurance against drought damage only covered 0.4% of arable land in Germany in 2018. One factor of this low coverage was the high cost of taxes for insurance premiums. With recent extreme weather events causing widespread damage to crops, the reduction in rate should aid farmers and agricultural businesses in taking out the insurance protection they need.
The reduced rate is effective from 1st January 2020.
