Court of Justice clarifies insurance condition for reduced agricultural aid in climate damage cases
The Court of Justice has ruled in case C-52/25 (Binanrier) on the interpretation of EU rules governing aid to agricultural SMEs affected by adverse climatic events, such as the severe drought experienced in Belgium between 2016 and 2017. The case concerned whether farmers who had not taken out insurance covering at least 50% of their production could automatically face a 50% reduction in compensation, even where the damage resulted from a climatic risk not actually insurable on the national market.
The Court held that, in principle, such aid must be reduced by half where farmers have not subscribed to qualifying insurance covering the most frequent climatic risks in their Member State or region. Importantly, the Court clarified that it is irrelevant whether the specific damaging event (such as drought) was itself insurable or whether farmers could have insured against that exact risk. The decisive factor is the existence of insurance covering the statistically most frequent risks.
However, the Court introduced an important exception: the reduction does not apply where it is proven that, given the available insurance market, the farmer could not realistically obtain insurance meeting the required conditions for their type of production. In such cases, it cannot be considered that the farmer failed to make “reasonable efforts” to insure their activity, and the incentive rationale behind the reduction falls away.
For more information, see the CJEU’s judgment.