Evaluating the potential of whole-farm insurance over crop-specific insurance policies (original) (raw)

Revisiting the demand for agricultural insurance: the case of Spain

Agricultural Finance Review, 2008

We use the actual insurance records of 52,300 farmers and 11 years to estimate two sets of insurance demands. We define measures of insurance's expected returns, variance and third moment, based on observed insurance data, and infer the expected returns for those farmers that have never had an indemnity. We estimate several probit models and count models for the insuring vs non-insuring strategies, in which the economic returns of insurance and its two measures of dispersion enter as explanatory variables. Results show that farmers' insurance strategies are largely explained by their actual insurance experience as captured by these three variables. Individuals with loss rations greater than 1 do not show more responsiveness that those facing more balanced premium charges. Results show that adverse selection may not be a major source of inefficiency in the Spanish insurance system.

Revenue Risk-Reduction Impacts of Crop Insurance in a Multicrop Framework

Applied Economic Perspectives and Policy, 2010

This study develops a multi-crop insurance model which is employed to evaluate crop insurance decisions when several crops are produced jointly. The results suggest that the diversification effects derived from producing multiple crops can substantially alter the risk reduction impacts of crop insurance versus if the decision is viewed from the perspective of a single crop. Further, the relatedness of crop production and price responses among crops differs considerably across insurance products and strategies. As a result, insurance strategies that might provide the maximum risk reduction for an individual crop do not necessarily carry over to the multi-crop case.

The Government Sponsored Crop Insurance Program: Expected and Unexpected Consequences

2008

Synopsis It is very popular for governments to use linear proportional premium subsidies to increase the insurance penetration in the agriculture production sector. This paper describes a case in which the affordability issue of agriculture insurance is induced by high fixed transaction cost. It is found irrespective of the independency of the risk government intervention helps farmers become better off, as long as the insurance company is certain about its portfolio risk. However, ambiguous information and spatial correlation of catastrophic risk make quite difficult for the insurance companies to estimate and price insurance lines correctly. Consequently, the unobservable high exposure and insolvent probability induced by the intervention could unconsciously hurt stakeholders involved.

Fair Value of Whole-Farm and Crop-Specific Revenue Insurance

2003

The U.S. market in subsidized commodity revenue insurance contracts has expanded rapidly since 1996. By far the most prevalent contract forms are crop-specific, rather than the wholefarm design which has a better claim to being optimal. For an arbitrary acre allocation vector, this paper inquires into absolute and relative determinants of the actuarial costs of these forms.

The demand for crop insurance. Combined approaches for France and Italy

2012

Abstract The aim of this paper is to understand which factors affect crop insurance decision in France and in Italy. These neighbor countries are characterized by a changing insurance system from a public fund to private policies which are highly subsidized. Despite the stakes related to crop insurance-CAP reform, size of the market, implication of the governments-, few studies have been drawn on this topic.

POTENTIAL EFFECTS OF CROP INSURANCE ON FARM ECONOMIC STRUCTURE

2001

The objective of this paper is to examine the potential impacts of crop insurance on farm economic structure using Nebraska county level data from 1980-1998. Using a profit function we fit input demand and output supply equations accounting for insurance premiums and indemnities to examine the economic impacts of crop insurance.

Evaluation of Risk Reductions Associated with Multi-Periol Crop Insurance Products

2002

This research examines risk-return tradeoffs across a full range of crop insurance products and coverage levels. Results indicate that farm-level products reduce risk for low probability events, but that risk reductions often are not large for events that occur with more regularity. Risk reductions vary with yield variability; with counties that have higher yield variability also experiencing greater risk reductions through the use of crop insurance.

Examining the equilibrium between agriculture crops insurance sources and consummations

2013

This study is to examine the equilibrium creation between the premiums received as sources and payable damages to be used; the study examined two factors: the nonparametric income pattern to measure income better and measuring the premium received by virtue of estimation nonparametric model for bivariate crop insurance policy and by virtue of these two factors it is possible to decrease the difference between received premiums and payable damages. The study was done in insurance services organizations and agricultural crops insurance fund in eleven cities in Fars province, Iran where they had insurance activities and damages assessment and payment in 2003– 2011. In the study wheat and barley crops were insured simultaneously in the same basket and having created a portfolio, foreseen, assessed simultaneously their premium in one bivariate crop insurance policy and received related premium by virtue of a bivariate crop insurance policy provided the field to decrease the probable dama...

Evaluation of risk reductions associated with multi-peril crop insurance products

Agricultural Finance Review, 2002

This research examines risk-return tradeoffs across a full range of crop insurance products and coverage levels. Results indicate that farm-level products reduce risk for low probability events, but that risk reductions often are not large for events that occur with more regularity. Risk reductions vary with yield variability; with counties that have higher yield variability also experiencing greater risk reductions through the use of crop insurance.