Agricultural insurance at the edge of climate extremes: Lessons from South Korea

Abstract

Agricultural insurance is widely promoted as a climate adaptation tool, yet its effectiveness as a true risk transfer mechanism remains uncertain in many countries. This perspective argues the role of agricultural insurance through a comparative analysis of systems in different countries and South Korea using secondary data, policy reports, and existing literature. Comparative evidence suggests that agricultural insurance performance varies considerably across contexts and tends to be stronger under supportive institutional, financial, and governance frameworks, as illustrated by South Korea's experience. While many countries continue to face challenges such as low coverage (<20%), delayed claim settlements, and weak institutional capacity, South Korea insures nearly 70 crops, achieves approximately 50% coverage for major commodities, and provides annual indemnities exceeding KRW 1 trillion during extreme events through strong legal and financial support mechanisms. However, insurance primarily stabilizes income, it may not necessarily address underlying structural vulnerability. Future policy should integrate insurance within broader adaptation strategies that include risk reduction measures, early warning systems, and transitions toward climate resilient agricultural systems.