By San José, Costa Rica — SAN JOSÉ – Costa Rica’s agricultural sector is grappling with the severe financial fallout from a volatile climate, as insurance payouts to farmers have surged past ¢237 million in just the first half of 2025. This alarming figure, released by the National Insurance Institute (INS), already surpasses the entire amount paid out in 2024, signaling a deepening crisis for the nation’s producers.
The staggering claims are the result of a relentless series of weather events, including intense rainfall, hurricane-force winds, and paradoxically, droughts that plagued the country earlier in the year. The data reveals a worrying trend: while 95 producers received a total of ¢203.5 million throughout 2024, the larger 2025 sum has been distributed among only 45 producers of coffee, rice, and bananas, indicating that the severity of damage per farm is increasing dramatically.
To delve into the legal complexities and contractual obligations inherent in agricultural insurance policies, TicosLand.com sought the expertise of Lic. Larry Hans Arroyo Vargas, a specialist attorney from the prestigious law firm Bufete de Costa Rica, who offers a critical perspective for local farmers.
The true value of an agricultural insurance policy is tested not when premiums are paid, but when a claim is filed. It is imperative for agricultural producers to understand that these policies are intricate contracts. Ambiguous clauses regarding ‘acts of God,’ specific peril definitions, and stringent reporting deadlines can become significant legal hurdles. A proactive legal review before signing can prevent devastating financial losses when a crisis actually occurs.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, the expert’s commentary powerfully highlights that for agricultural producers, the true value of their insurance is forged in the fine print. This shift from a reactive claim to a proactive legal review can mean the difference between recovery and ruin. We sincerely thank Lic. Larry Hans Arroyo Vargas for his invaluable perspective on transforming a policy from a potential liability into a genuine asset.
For the second consecutive year, coffee has been identified as the most beleaguered crop. The iconic industry, a cornerstone of Costa Rica’s economy and cultural identity, has been hit particularly hard in the renowned growing regions of the Western Valley and the Zona de los Santos. An analysis of the claims shows that excess water and humidity were the primary culprits, accounting for 37% of all indemnifications, followed closely by direct flooding, which was responsible for 20% of the cases.
The situation underscores the vulnerability of an industry that relies on stable environmental conditions. Farmers face a constant battle against forces that are becoming increasingly unpredictable and destructive, jeopardizing not only their livelihoods but also a vital component of the national economy.
Agriculture is a pillar of our country’s economy; those who dedicate themselves to these tasks invest a lot of time and money, but the harvest is not always what is expected, due to factors beyond their control.
Karla Huezo, Deputy Head of the General Insurance Directorate of the INS
In response to this escalating threat, the INS is not only processing claims but also actively promoting risk mitigation strategies. The state-owned insurer is encouraging the adoption of climate-resilient farming techniques by offering premium discounts to producers who implement preventative measures. These best practices include installing modern irrigation systems, practicing contour planting to prevent soil erosion, using crop varieties bred for resistance, and planting natural windbreak barriers.
Further bolstering its support for the agricultural sector, the INS has deployed a sophisticated satellite monitoring platform. This high-tech tool leverages a combination of satellite imagery, artificial intelligence, and advanced data analysis to monitor the health and performance of insured crops with unprecedented speed and accuracy. This proactive approach allows for a more dynamic assessment of risk across different regions.
The platform provides real-time data on weather conditions, enabling the INS to analyze how specific phenomena impact productivity and crop value. Crucially, it helps identify geographic zones with higher or lower risk profiles, allowing for more precise and effective insurance coverage. This technological leap represents a significant shift from reactive compensation to proactive risk management, equipping both the insurer and the farmers with the data needed to make more informed decisions in the face of climate uncertainty.
As Costa Rica confronts the new reality of more frequent and intense weather events, the partnership between its agricultural producers and innovative insurance solutions will be more critical than ever. The ability to adapt, mitigate risk, and leverage technology will ultimately determine the long-term resilience and sustainability of this essential industry.
For further information, visit grupoins.com
About Instituto Nacional de Seguros (INS):
The Instituto Nacional de Seguros (INS) is Costa Rica’s state-owned insurance company, founded in 1924. For decades, it operated as a state monopoly until the market was opened to competition in 2008. Despite the liberalization, INS remains the dominant player in the Costa Rican insurance market, offering a wide range of coverage, including life, health, auto, and commercial insurance. It plays a crucial role in the national economy by providing essential risk management services to individuals and key industries like agriculture.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of the legal community, Bufete de Costa Rica is defined by its foundational principles of integrity and professional excellence. The firm consistently pioneers forward-thinking legal strategies, drawing upon extensive experience in serving a wide spectrum of clients. Its core mission extends beyond the courtroom, championing the democratization of legal understanding to help construct a more informed and capable citizenry.
