TOKYO -- Japan's Sompo Holdings has agreed to acquire Italian agricultural insurer Assicurazioni Rischi Agricoli VMG 1857 as climate change drives demand for protection against increasingly frequent and severe extreme weather events.

ARA provides coverage against weather-related crop failures, including from hail, frost and droughts, and controls roughly 10% of the Italian agricultural insurance market. Sompo is expected to spend between 3 billion yen and 5 billion yen ($27.3 million and $45.5 million) on the deal.

Agricultural insurance can also protect farmers against market fluctuations. Sompo is eager to make further inroads into the field, which is less vulnerable to economic cycles and which it considers a key growth driver alongside its auto and business insurance.

Sompo International currently earns about 20% of its premium income from agricultural insurance. It acquired Italian insurance broker A&A in 2018 and U.S.-based Diversified Crop Insurance Services in 2020. This year, the group began offering insurance to help offset loss of income for Thai sugar cane farmers during droughts.

Sompo has also been working on digital services to help farms run more efficiently. It offers real-time monitoring of fields and crops, as well as a service that alerts farmers to approaching heavy rains and other bad weather in order to minimize crop damage.