1980. Decisions that make history

Agroseguro (Agrupación Española de Entidades Aseguradoras de los Seguros Agrarios Combinados, S.A.) [Spanish Pool of Multi-peril Agricultural Insurance Companies, PLC] was created in 1980 at the instigation and thanks to the commitment of 25 insurance entities and following extensive legislative efforts by politicians of the time. It was unquestionably a process that came into being at a point in time for our country and our democracy when agricultural insurance was viewed as a cornerstone of the kind of Spain people were trying to build.

Based on earlier experience in Spain since the beginning of the century, at our democracy’s inception there was widespread consensus that there was a need for a comprehensive agricultural insurance scheme, and so many of the political parties that took part in the first general election held on 15 June 1977 had brought in their programmes proposals that included passing new legislation to set up a crop insurance scheme.

This shared concern in their programmes helped make multi-peril agricultural insurance one of the agricultural, fisheries, and marketing policy measures included in the Pactos de la Moncloa [Moncloa Palace Agreements] of 27 October 1977 that were signed by all the parties represented in Parliament at the time on, in their turn represented by some of the great names in the history of our democracy: Adolfo Suárez (for the Government), Leopoldo Calvo-Sotelo (UCD [Union of the Democratic Centre]), Felipe González (PSOE [Spanish Socialist Workers' Party]), Santiago Carrillo (PCE [Communist Party of Spain]), Enrique Tierno Galván (Partido Socialista Popular [People’s Socialist Party]), Josep Maria Triginer (Federación Catalana PSOE [Catalan section of the PSOE]), Joan Reventós (Convergencia Socialista de Cataluña [Union of Catalan Socialists]), Juan Ajuriaguerra (PNV [Basque Nationalist Party]), Miquel Roca (CiU [Convergence and Union Party]), and Manuel Fraga (AP [People’s Alliance Party]).

Figure 1. Signing of the Moncloa Agreements (1977).
Source: Antonio Gabriel. Fotoperiodismo y Transición española (1975-1982): la fijación y circulación de los acontecimientos a través de la prensa gráfica y su relectura memorística [Photojournalism and the Spanish Transition (1975-1982): recording and remembering events in the illustrated press, and a historical rereading].

In particular, section VIII of the Agreement on remodelling and restructuring the economy required specifying a farming management and pricing policy and regulating the operation of farmers' organisations and farmers savings banks; mandated submitting a series of legislative bills dealing with agricultural matters, such as rural leases, farmers' associations, crop and livestock farmers' cooperatives, agricultural transformation, restructuring, and development associations. It specifically and separately made reference to a commitment to submit to the Parliament a Multi-peril Agricultural Insurance Act to protect farmers from the impact of catastrophic events.

After signing the Pactos de la Moncloa, drafting the Multi-peril Agricultural Insurance bill took quite some time, nearly 10 months, and after being approved at the first Council of Ministers held by the democratically elected government, it was passed by both the Congress and the Senate in the autumn of 1978. Finally, the Spanish Act 87/1978 [Ley 87/1978] (in Spanish), on Multi-peril Agricultural Insurance, was signed into law on 28 December of that year, just a few days after the Spanish people had approved the Spanish Constitution in a referendum. The Act was then, and still is now, short, open-ended, and flexible, something that could today be compared with the spirit that informs a ‘framework law’.

Nearly a year later, section 41 of the Spanish Royal Decree 2329/1979 [Real Decreto 2329/1979] (in Spanish), of 14 September, approving the Implementing Regulations to the Multi-peril Agricultural Insurance Act established Agroseguro by providing that “insurance entities that wish to offer this type of Insurance must provide coverage for all perils and for that purpose shall all form a pool under any of the legal forms permitted by law, and that Insurance may not be offered outside that Pool. The Pool shall be an entity with its own separate legal personality.”

The Implementing Regulations also set forth the Pool’s main functions, e.g., to act as the representative of all the co-insurers, to sell insurance on behalf of the co-insurers, to distribute the risks in the proportion set annually based on each entity’s shareholding, to provide administrative services for the Insurance, to carry out loss adjustment and pay compensation, to conduct statistical analyses and actuarial research, and to cooperate with the Entidad Estatal de Seguros Agrarios (ENESA) [Spanish National Agency for Agricultural Insurance] and Consorcio de Compensación de Seguros in the matters within the scope of their respective remits and with the Ministry of Agriculture and the Ministry of Finance (today the Ministry of the Economy, which under different titles is in charge of regulating and supervising insurance entities) as required. Those functions remain unchanged today, as are the Spanish Act 87/1978, on Multi-peril Agricultural Insurance and the Implementing Regulations to the Act basically as well.

Figure 2. Spanish Act 87/1978 on Multi-peril Agricultural Insurance.
Source: boe.es [Official State Gazette of Spain].

What is more, of the eight points covered in the Pactos de la Moncloa, the multi-peril agricultural insurance scheme is the only one that has continued fully in effect as it was conceived, which shows that the approach as put forward and implemented was right on target and that the legislative texts enacting and implementing it were well drafted. In fact, it appears to me that the normative and institutional framework put in place by that legislation, mainly attributable to the then Minister of Agriculture, Jaime Lamo de Espinosa, is still entirely sound nearly half a century later.

In the two years that went by between enactment of the legislation and the birth of Agroseguro, not only did the Implementing Regulations have to be drafted, the new arrangements had to be explained to the insurance sector. There were plenty of arguments in support of the scheme: there was the political backing and the technical experience and proven good management by the Pool Nacional de Cereales [National Grain Pool], and it was attractive to insurance brokers and sales networks all across Spain, and so a considerable portion of the insurance sector decided to join in at Agroseguro’s inception in 1980.

On 17 April 1980, the initial 25 insurance entities established the Agrupación Española de Entidades Aseguradoras de los Seguros Agrarios Combinados [Spanish Pool of Multi-peril Agricultural Insurance Companies] at 18 Sagasta St. in Madrid (at the Pool Nacional de Cereales headquarters building). Each one subscribed shares in the amount of 40,000 pesetas, in all contributing a total initial share capital of one million pesetas (6,000 euros), thereby, possibly without fully realising it, setting in motion a scheme, Spain’s Multi-peril Agricultural Insurance scheme, whose backing would prove to be decisive for the primary sector and the livelihood of the countryside in Spain during these 45 years.

Figure 3: Founding shareholders of Agroseguro.
Source: Agroseguro, 1980-2005. Crónica de una gran aventura [Agroseguro, 1980-2005. Chronicle of a great adventure].

The founding act was attended by representatives of the Dirección General de Seguros [Directorate general of Insurance], Consorcio de Compensación de Seguros, the recently established Entidad Estatal de Seguros Agrarios (ENESA), and UNESPA [Spanish Association of Insurers], befitting the public-private nature of the Multi-peril Agricultural Insurance scheme from its very outset, something that has continued to this day, the basis that has made it robust, has given it prestige, and with the passage of time has enabled it to grow into an institution that is unquestionably of great value to society and one that has become an international leader. That was indeed a highly symbolic moment, yet it was transient, since barely three months later, on 29 July, the Board increased the share capital to 25 million pesetas (150,000 euros, but back in the day), and the number of co-insurers rose to nearly 80, including all the major insurance entities and groups, bearing witness to the sector’s earnest commitment. This also served to increase Agroseguro’s economic wherewithal for start-up, to spread the risk among more insurers, and at the same time pooling all the resources of all the shareholders together considerably expanded the sales network for selling policies. Today, after countless corporate transactions that have greatly increased the concentration of the insurance industry along with changes that have resulted in a high level of specialisation, Agroseguro now brings together no fewer than 15 insurance groups.

Agroseguro started out at the office on Sagasta St. with the support of Aseguradores Reunidos, S.A. (ARCA), which was like the “parent” of Ofesauto ¹Oficina Española de Aseguradoras de Automóviles (Ofesauto) [Spanish Automobile Insurers Bureau,]. Its members are all insurers operating the car insurance line in Spain, including Consorcio de Compensación de Seguros. and Serea ²Agrupación de Aseguradores de Seguros Obligatorios (AGRASO-SEREA) [Compulsory Insurance Providers' Group]. , where the first Agroseguro staff came from, and even its first photocopier, and of the insurance industry’s statistical service, ICEA, to which IT services were initially outsourced, as Agroseguro’s first annual report noted with thanks “for their enthusiastic cooperation and involvement in start-up and completion of our Company’s first year.” The contribution to Agroseguro’s staffing was essential, especially those staff members known internally as the original eleven, many of them recent retirees, with their never-ending workdays from Monday to Saturday. Led by the first president, Joaquín Royo Burillo, they laid the groundwork for what Agroseguro has become today. As recounted in the Crónica de una gran aventura [Chronicle of a great adventure], the publication issued on its 25^th anniversary, Agroseguro was then “a delicate lacework woven through the willpower of a handful of people patiently working with great determination.”

That same year, 1980, was the year of the first Multi-peril Insurance Plan, approved by the Council of Ministers on 30 May, encompassing five lines of insurance: comprehensive winter cereal crop insurance for 10 districts, offering 50% coverage; hail insurance for wine grapes, apples, and tobacco, all three with 100% national coverage; and a citrus fruit multi-peril insurance with 50% coverage for frost and 100% coverage for hail, but restricted to 15 provinces. The number of policies underwritten that year came to 2,204. Premiums totalled 194 million pesetas (1.17 million euros), and the sum insured came to nearly 3,700 million pesetas (22 million euros). Today it is not uncommon for these underwriting figures to be reached in a single day.

After its launch, the scheme stepped on the gas. In 1981 the Plan raised the number of lines from the initial 5 to 17, and in 1982 to 22, despite the growing concern of the panel of co-insurers, who preferred to grow the system more cautiously and more gradually. In addition, that growth took place together with an across the board decrease in rates, made at the request of the Ministry of Agriculture, to increase the number of farmers that purchased insurance. This soon proved to be the wrong decision, because 1982 and 1983 were years of serious outbreaks of swine fever, forest fires, and flooding in the Mediterranean area, with loss rates of 129% and 209%, respectively, too high for a pool that at the time did not have in place the safeguards that exist today, namely, a minimum stabilisation reserve set up by the insurance entities and a strong public reinsurance scheme.

This shows that not all was plain sailing in those years: the financial situation was quite precarious, premium payments by policy holders were delayed, at that time deferred until after the harvest; subsidies too were subject to delays, as were payouts after losses. First, great efforts were made to stabilise Agroseguro and prevent co-insurers from leaving, with Consorcio de Compensación de Seguros having to take on a growing stake, up to nearly 50% of the shares. And then, around 1987, reinsurance arrangements were strengthened through restructuring, which put the scheme back on track and paved the way for insurers to rejoin the Pool in large numbers. The work of Agroseguro’s then president, Gabriela González-Bueno Lillo, and her management team was crucial.

As those early years of the multi-peril agricultural insurance scheme and Agroseguro gradually unfolded, many other new challenges and difficulties arose. Chief among these were ensuring that each insurance was brought into technical balance; collecting reliable statistics and data for expanding covers to include new lines, continuously in demand by farmers and by the government, with reasonable guarantees, something that could not always be achieved; improving the technical specifications of covers (I would just mention compressing the nearly 150 lines of insurance there eventually came to be down to a little more than 40, one per production sector, and reformulating insurance units into what came to be called “increasing insurance”); planning the standards for each line to provide sufficient margins; and expanding manpower and training for the network of loss adjusters. All this, as is only to be expected, in the framework of public-private cooperation, entailing the need for coordination with the Ministry of Agriculture and harmonisation with Spain’s agricultural policy, as was published on one anniversary. This path was also followed by the successive presidents Esteban Tejera Montalvo and Antonio Fernández Toraño, predecessors of the author of this article.

Figure 4. From left to right: Joaquín Royo Burillo, Gabriela González-Bueno Lillo, Antonio Fernández Toraño, and Esteban Tejera Montalvo, presidents of Agroseguro between 1980 and 2011.
Source: Agroseguro, 1980-2005. Crónica de una gran aventura [Agroseguro, 1980-2005. Chronicle of a great adventure].

So, none of these more than four decades has been devoid of decisive moments, economic and budgetary crises, tensions among the different actors, and even a pandemic, but all the challenges have been successfully overcome.

Over these 45 years, the multi-peril agricultural insurance scheme has undergone exponential technical and technological development to become a universal product that covers nearly all of our country’s crop and livestock farm production activities against all relevant climate perils. The scheme has proved itself to be a dynamic system that has followed along the path of a clear upward trend towards growth and improvement from its beginnings, and though it has sometimes had to use caution because of climate change, its efficacy has been demonstrated beyond all doubt. Those of us who have had the opportunity to be accompanying it on its journey have taken on the same responsibility borne by its first employees: to adopt a management style that eschews short-term approaches and instead fosters a vision for the future, setting as its main objectives achieving technical balance and adjusting to the changing needs of our farming sector.

The figures are incontrovertible. The sum insured by the multi-peril agricultural insurance scheme has, with some exceptions, continually set record after record throughout the course of its history, reaching more than 18billion euros of production value insured in 2025. That amount is half of the country’s entire agricultural output, quite a substantial share, especially in comparative terms, and has been attained through high volumes of insurance for certain key agricultural products critical to our country’s economy, for instance, cereal grains, fruits, wine grapes, and vegetables. Other crops though, like olives, still have room for growth.

In all, nearly 17 million policies were purchased, with more than 20,000 million euros in premiums, 50% of which have come from government entities (ENESA and the Regional Governments). This investment is vital to reducing uncertainty for crop and livestock farmers, who paid in the other 50%, and had nearly 17billion in losses, that is, payouts as compensation for claims. On top of this, the scheme also has to absorb operating expenses and sales costs, with the indispensable support by the reinsurance provided by Consorcio de Compensación de Seguros. As a result, our farmers' trust in the scheme, and their loyalty, have been continuously on the rise throughout these 45 years, and the scheme is now viewed as the best tool available for tackling the climate perils to which farming is exposed.

The current climate situation has, unfortunately, turned into the main challenge facing the multi-peril agricultural insurance scheme. As already discussed, covers against potentially severe weather events like drought, frost, and hail were already being offered back in 1980. However, both the frequency and the intensity of those events have increased over the course of time.

From the outset the support of an experienced network of loss adjusters has been fundamental to handling claims. At the start, the scheme was able to use the network that the now defunct Pool Nacional de Cereales already had in place, though it had to be buttressed and expanded. Currently over 500 loss adjusters cooperate with Spain’s Muti-peril Agricultural Insurance scheme. They engage in assessing losses, and their work is essential in periods or years with very high loss rates. Over 45 years, Agroseguro has handled 31 million claims in all. Some years have been especially severe, in particular 2023, a year we will long remember.

Growth should not, however, be measured in numbers alone. Throughout those 45 years, Agroseguro has been making ongoing investments in technology and digitalisation, no longer having to rely on borrowed or shared photocopiers. The first calculator, a Hewlett-Packard clamshell minicalculator capable of performing the many premium calculations for each crop, equipped with a small thermal printer, arrived in 1982, to go along with the Lexikon 80 typewriters with wide carriages capable of taking A3 paper. The first computer, a North Star Advantage model with 64 kB core memory and a 5-megabyte hard disk that cost 1,380,000 pesetas (8,300 euros), arrived a year later, at Christmastime in 1983. Nothing like the capabilities of today’s equipment. Clearly, the first of many investments that have transformed the organisation.

Today, Agroseguro is an advanced, innovative enterprise that takes advantage of all the latest advances (web services, cloud technologies, applications, artificial intelligence, etc.) without disrupting the co-insurers, its sales networks, or its customers, crop and livestock farmers, who have expressed high levels of satisfaction with all the efforts made to improve their customer experience, the information provided, policy customisation, the quality of loss adjustment, and the length of time to payout after a loss. We are a competitive, up-to-date enterprise that has also implemented high security standards.

Agroseguro is a modern, thriving, non-conformist enterprise continually in the process of transforming its processing methods. It has deep roots and strong values, it looks to the future eagerly, responsibly, always seeking to improve.

In bringing this commemorative historical review to a close I would like to include a word of recognition for all the hard work and the efforts of all the people who have partnered with us over these past 45 years, as Agroseguro employees and shareholders and its Board, plus the employees of the co-insurers, the government entities that take part in the scheme, with a special word for ENESA and Consorcio, the farming associations, the loss adjusters, and the intermediaries. In short, all those who have put their experience and time into a scheme that is much more than just insurance. Their commitment, involvement, and experience have been key to enabling Agroseguro to have reached 45 years with the strength and determination it needs to tackle the challenges of the future.