Insurance companies are pulling back from covering agricultural climate risks at the precise moment when Ethiopian farmers face mounting threats from El Niño weather patterns, according to monitoring data and food-security assessments. The retreat leaves smallholder farmers increasingly exposed to weather-related losses that devastated parts of the country during the 2026 growing season.
A food-security monitoring network warned in October that rainfall shortfalls between June and September would substantially reduce the 2026 Meher harvest, the main growing season. Parts of Tigray Regional State, the Tekeze River catchment and East and West Hararghe received less than 50 percent of normal rainfall, according to AGRA's September 2026 Food Security Monitor. Production losses exceeded 40 percent in some locations. Regional forecasts point to a heightened risk of floods in southern Ethiopia between October and December, compounding the challenge.
The El Niño effects are particularly pronounced in the Amhara, Tigray and Afar regional states, while parts of the Somali Regional State were already contending with an earlier drought. These combined pressures have created a severe operating environment for both farmers and those attempting to insure agricultural production.
Although insurance can serve as a useful complement to early warning systems and disaster preparation efforts, it cannot eliminate climate risk or make up for every financial loss that farmers suffer. Insurers recognise this limitation, yet their reluctance to underwrite farm exposure to climate events means that the protection mechanism that could help bridge the gap between harvest failure and recovery is increasingly unavailable. For Ethiopian smallholder farmers, this means fewer options to protect their livelihoods when weather extremes strike.
The combination of reduced insurance availability and heightened climate vulnerability creates significant exposure for rural communities dependent on agriculture, with limited financial buffers to absorb substantial production losses.