Evaluation of the subsidy scheme for broad weather insurance

The broad weather insurance scheme (BWV) was launched in the Netherlands in 2010 to provide farmers with financial protection against damage from extreme weather events, such as drought, hail and flooding. It replaced the previous system of unpredictable, ad hoc government compensation. To make the scheme more accessible, the government covered a substantial part of the insurance premium, and in 2020, an exemption from insurance tax (ASB) was introduced to further lower the cost for farmers. In 2024, the ministry of agriculture, nature and food quality (LNV), together with the ministry of finance, commissioned a final evaluation to examine the performance and future relevance of both the BWV and the ASB exemption.

The objective of the evaluation was to assess the effectiveness, efficiency, and reach of the BWV and the related insurance tax exemption ASB over the period 2010-2022, and to explore future policy options beyond 2024. The scope included both an ex post evaluation, examining how well the scheme has functioned since its introduction, and an ex ante evaluation, assessing whether the scheme could operate without government support in the future or whether alternative instruments might be more suitable. The evaluation aimed to provide input for future agricultural risk management policy and to ensure accountability to the Dutch parliament.

The evaluation used a mixed-methods approach combining desk research, quantitative data analysis and expert interviews. Desk research included reviewing policy documents, historical data on the BWV, insurance terms and international comparisons. Quantitative analysis was conducted using data from the Dutch 'Gecombineerde opgave# and the Farm Accountancy Data Network to assess uptake, income effects and risk profiles. Additionally, simulations were carried out to evaluate financial resilience under various weather scenarios. Expert interviews provided practical insights from stakeholders, including insurers, policymakers and sector representatives.

The evaluation concludes that the BWV is broadly effective and efficient. It enhances the financial resilience of farms affected by extreme weather, reduces reliance on ad hoc government compensation, and operates at low administrative cost. The scheme mainly benefits larger and higher-risk farms, such as fruit growers, and saw a significant increase in uptake after the introduction of the insurance tax exemption (ASB) in 2020. As part of the ex ante analysis, the evaluation explored whether alternative policy instruments might offer better outcomes. It found that none of the examined alternatives could realistically achieve the same objectives as the current scheme. However, the BWV remains dependent on government support, and the original policy ambition of a self-sustaining insurance market has yet to materialise. The evaluation, therefore, recommends continuing the scheme as a structural component