The challenge
Can an insurer deny a drought claim when the worst drought in sixty years is documented by the national meteorological service, an emergency Royal Decree-Law and the Andalusian Government itself? A group of beekeepers in the province of Málaga held a collective agricultural insurance policy covering, among other risks, drought damage. During the 2005 season — the most severe drought recorded in the area in sixty years — the insurer denied all claims, relying on the fact that its satellite monitoring system had not detected drought in the affected areas.
The court of first instance dismissed the claim entirely. Convinced that the monitoring system was flawed and their rights had been infringed, our clients instructed us to pursue an appeal.
Our approach
We built the appeal before the Málaga Provincial Court around three main arguments.
First, we argued that the clause restricting the definition of drought to the satellite remote-sensing system constituted a restrictive clause within the meaning of Article 3 of the Spanish Insurance Contract Act, requiring express, individual written acceptance. Since this requirement had not been met, the clause was unenforceable against our clients.
Second, we established that the drought was an objective, undeniable fact: the National Meteorological Institute classified it as the most severe in sixty years; an emergency Royal Decree-Law was enacted; the Andalusian Government declared a water emergency across Málaga province; and the court-appointed expert confirmed a 48.66% decline in honey production. Against all of this, the insurer implicitly admitted the system's failure by overhauling it in 2006 and issuing a circular acknowledging that its measurement method had produced "distortions and discrepancies".
Third, we demonstrated that the insured parties could not have lodged their claims within the contractual deadline because the insurer's own system never published a drought alert — without which the policy did not allow a claim to be initiated. Any delay was therefore attributable solely to the insurer.
Outcome
The Provincial Court upheld the appeal in its entirety, reversed the first-instance judgment and ordered the insurer to pay all claimed indemnities, plus the 50% surcharge on statutory interest under Article 20 of the Insurance Contract Act, with costs awarded against the defendant insurer.