Abstract: Yunnan Province is a major sugarcane-producing region in China. Nevertheless, its distinctive topography and climatic conditions lead to an uneven spatiotemporal distribution of precipitation and frequent drought occurrences, which jeopardize the sustainable development of sugarcane cultivation and related industries. Utilizing observations from sugarcane planting areas and ground meteorological stations across the province, a drought risk assessment for sugarcane cultivation is conducted using principal component analysis. By incorporating regional risk adjustment coefficients to account for risk variations among different planting zones, a drought meteorological index insurance product is designed, and premium rates are determined through distribution fitting. Additionally, simulations are performed to evaluate the insurance program's performance under both historical conditions and future climate change scenarios. Results reveal several key findings regarding drought risk in Yunnan's sugarcane cultivation. The highest drought hazard intensity is observed at Pu'er, while the lowest is recorded at Xishuangbanna. The strongest drought coping capacity is identified at Baoshan, whereas the weakest is found at Pu'er. Consequently, the overall drought risk is determined to be highest in Pu'er and lowest in Xishuangbanna, justifying the implementation of differentiated pricing in the insurance design. For the drought meteorological index insurance design, the hazard index is defined as the cumulative sum of positive anomalies between water requirement and actual precipitation during 3 critical growth stages: sprouting, tillering, and elongation. This methodology accounts for variations in water demand across different development phases and effectively reflects drought-related losses. The pure premium rate for the sugarcane meteorological index insurance product is established between 2.16% and 6.46%. The adjusted premium rates are calculated as follows: 6.89% for Pu'er, 6.85% for Lincang, 4.83% for Dehong and Jingpo, 2.05% for Wenshan, 4.63% for Baoshan, 1.97% for Xishuangbanna, and 2.05% for Honghe. Simulation results demonstrate that the average loss ratio across all risk zones is within 64% to 75%. Except for Wenshan and Xishuangbanna, loss ratios in all other production areas comply with prevailing agricultural insurance requirements, indicating relatively stable performance. Projections under future climate scenarios suggest a general increasing trend in loss ratios corresponding to higher emission scenarios. These findings provide scientific support for the design, promotion, and risk assessment of drought meteorological index insurance for sugarcane cultivation in Yunnan, as well as for the development of climate risk adaptation strategies.