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[03.04.2006 ] The Law of Moldova Republic on subsidized agricultural insurance
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| The Law of Moldova Republic on subsidized agricultural insurance. This law was adopted by the Parliament of Moldova in July, 2004 identifying the basics of the government agricultural insurance subsidy program and set the general principles for agricultural practice in the country.
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Country:
Moldova |
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[30.05.2006 ] Insuring against bad weather recent thinking
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Author:
Peter Hazell and Jerry Skees |
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[30.05.2006 ] The Bad Harvest
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Author:
Jerry R. Skees |
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[30.05.2006 ] Agricultural Risk Management or Income Enhancement?
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Author:
Jerry R. Skees |
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[30.05.2006 ] Risk Management Challenges in Rural Financial Markets: Blending Risk Management Innovations with Rural Finance
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Author:
Jerry R. Skees |
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[30.05.2006 ] Innovations in Government Responses to Catastrophic Risk Sharing for Agriculture
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Author:
Jerry Skees, Barry Barnett, Jason Hartell |
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[30.05.2006 ] Weather Indexes for Developing Countries
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Author:
Panos Varangis, Jerry Skees, and Barry Barnett |
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[05.06.2006 ] Çàÿâà ïî ñòðàõóâàííþ óðîæàþ ñ³ëüñüêîãîñïîäàðñüêèõ êóëüòóð ç äåðæàâíîþ ï³äòðèìêîþ
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| Ðåêîìåíäîâàíèé òåêñò óãîäè äëÿ ñòðàõóâàííÿ îçèìèõ êóëüòóð çà Äåðæàâíîþ ïðîãðàìîþ
ñóáñèäóâàííÿ ñòðàõîâèõ ïðåì³é, ñïëà÷åíèõ âèðîáíèêàìè çà óãîäàìè ñòðàõóâàííÿ îçèìèõ êóëüòóð |
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[12.12.2006 ] Weather Risk Management
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| The following paper discusses methods of hedging with over-the-counter weather derivatives--specifically, Heating Degree Day (HDD) swaps and options. The examples used in this paper cite hypothetical over-the-counter derivative strategies used by the management of the
fictitious firm, the "Frozen Falls Fuel Company."
This paper was originally published by Applied Derivative Trading in their April 1999 edition. See www.adtrading.com
Source - http://www.cme.com |
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Author:
Bob Dischel, Ph.D., CCM |
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Country:
USA |
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[01.03.2007 ] Lithuania - Law on Agricultural sector development (2002)
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| This Law specified the general principles of the working-out and implementation of an agricultural and rural development policy in the Republiñ of Lithuania. |
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Author:
Government of Lithuanian Republic |
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Country:
Lithuania |
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[31.07.2007 ] Agricultural Insurance in Developing Countries
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| Agricultural insurance can play only a limited role in managing the risks related with farming, as basic risk management measures in agriculture rest with other disciplines such as plant and animal breeding, crop and animal husbandry practices, diversification of farm enterprises as well as taking precautionary prevention measures against adverse weather events such as using mulching and shelter belts and, perhaps most important of all, securing access to supplementary irrigation facilities. |
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Author:
Anthon Slangen, FAO |
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Country:
International |
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[01.08.2007 ] Introduction of weather index insurance products in Ukraine - perspectives and obstacles
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| Ukraine has good quality weather and crop yield data that is sufficient for design of weather structures. The country has sufficient scientific and practical expertise to design and support index structures. National legislation allows the use of weather instruments for agricultural applications. The insurance companies can comparatively easy register the rules of weather index insurance. It should be understood that the weather index concept is new to insurers and staff should be additionally trained to be able to sell contracts. Current MPCI and yield index products do not meet the needs of producers. The products suffer from classical problems of traditional insurance including asymmetry of information (anti-selection, moral hazard, and the are costly to administrate.
The public support program in Ukraine is in the pilot phase and is ready to include weather indexes (the legislation foresees the introduction of weather indexes within the support program). |
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Author:
Roman Shynkarenko |
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Country:
Ukraine |
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[02.08.2007 ] Review of the current state of world aquaculture insurance
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| Due to the rapidly changing production processes in aquaculture worldwide (e.g. submergible cages, sea ranching, intensification, aquaponics and recirculation systems), which sometimes increase vulnerability to disease outbreaks and which generally require large investments from aquaculturists, over the last decades the demand for insurance to share and cover the risks involved has increased significantly within the aquaculture sector. Risk management is increasingly gaining attention within the aquaculture sector, which is reflected in the development and increasing implementation of Better Management Practices (BMPs), Codes of Conduct and Codes of Good Practice, Standard Operational Procedures, certification and
traceability. Aquaculture insurance is one of the tools used in aquaculture risk management, but there is considerable ignorance within the aquaculture industry about its availability, the process of obtaining insurance cover, especially on aquaculture stock mortality, and the constraints to insurers providing its services.
Some of the main conclusions of the review study are the following: the demand for aquaculture insurance has never been as high as it is now; there is a widening gap between the demand for and supply of aquaculture insurance in the world; the number of aquaculture insurance policies in force is estimated at around 8 000 worldwide; some regions (sub-Saharan Africa, South America and large parts of
Asia) are barely covered by aquaculture insurance services; aquaculture insurance policies in force in Asia are generally of the “named perils” type, while those in other regions are often of the “all risks” type; while the range of species and culture systems covered under aquaculture policies worldwide is diverse, many insurers only focus on a small number of traditional aquaculture species and are reluctant to include “new” species and culture systems; reinsurance is an important component of aquaculture insurance in a country and for developing and disseminating the service; the underwriting experiences of aquaculture insurance companies largely differ among companies and regions and from year to year; since the start of the new millennium it seems that experiences are improving and that aquaculture insurance activity is becoming profitable; mutual insurance schemes in aquaculture
are still insignificant; the lack of enabling policies and regulatory frameworks for aquaculture and fisheries insurance is negatively affecting the development of insurance services and the sustainable development of the aquaculture sector; and asymmetric information, moral hazard and adverse selection remain among the
major constraints to undertake aquaculture insurance activities for international and national insurance companies, which negatively influence the results of new entrants in the aquaculture insurance sector during the first few years of business. |
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Author:
Raymon van Anrooy, Philip A.D. Secretan, Yong Lou, Richard Roberts, Maroti Upare (FAO) |
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Country:
International - FAO |
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[03.08.2007 ] Climate derivatives - the potential for Australian agribusiness
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| Australia is the driest continent on the Earth. Droughts are very often related to El Nino phenomenon which is developed due to increasing sea surface temperature. This phenomenon is becoming more and more frequent with the periodicity changed from 7 to 2-3 years. Drought and water application problems in Australia are crucial for many agribusinesses in Australia. A team of scientists and insurance experts designed a weather index (derivative) instrument which can be used by farmers to mitigate drought. Presentation provides a short overview of the new product. |
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Author:
Prof. Roger Stone, Dr. Peter Best, Dr. Olena Sosenko |
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Country:
Australia |
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[15.08.2007 ] Potential Role for Insurance in Managing Catastrophic Risks in Developing Countries
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| The prevalence of natural disasters is not new and farmers, rural institutions and lenders have, over generations, developed ways of reducing and coping with risk (e.g. crop diversification, transhumant livestock systems, kin support networks, storage and asset accumulation). Although the virtues of these traditional risk
management mechanisms are widely recognized (see, for example, Hazell, Pomareda, and Valdes ), they also have their limitations. They can be costly in terms of the income opportunities that rural people forego (e.g. crop diversification is typically less profitable than specialization). They can discourage investments and technological changes that, while risky, enhance long-term productivity growth. And they have limited capacity to spread covariate risks like droughts that affect most people in a region at the same time. In theory, these limitations would not exist if capital and insurance markets were perfect and could pool risks more widely, but the reality for many risky agricultural regions in developing countries is quite the opposite; relevant capital and
insurance markets are poorly developed and they are weakly linked across regions and with urban areas. |
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Author:
Peter Hazell |
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Country:
International |
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[20.09.2007 ] USA - GAO Finds Farm Payments Influence Landowner's Decisions to Convert Grasslands to Croplands
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[20.09.2007 ] USA - Money source for farm disaster-aid plan not set
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[28.10.2007 ] Instruments reducing climatic risks for Russian agriculture
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| The paper evaluates technical solutions and two main tapes of index-based insurance: area yield insurance and weather-based index insurance regarding their efficiency in reducing climatic risks of Russian farms in the steppes zone. The analysis considers area yield insurance at two levels of aggregation - oblast and rayon (county) level. Weather-based index insurance products are drawn up by combining two weather parameters – daily precipitation and daily average air temperature. We employ yield and weather data of an experimental station in the Central Volga Russia for the period from 1979 to 2000. In addition experts’ assessments are used to specify alternative levels of production technology and respective yield distributions for the considered region. To assess utilityefficiency
of the defined insurance products a programming model were formulated
for 22 states of nature and 3 levels of the decision-maker risk aversion. The model estimation results show that area yield insurance based on oblast and rayon yields stabilize farm income mostly efficiently. The weather-based index insurance follows immediately after. So, both index-based insurance types provide
the considered farm with a higher utility than farm yield insurance with deductibles.
This points at a high potential of index-based insurance as an instrument reducing climatic risk of Russian farms situated in the steppes zone. |
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Author:
Marina Sannikova, Raushan Bokusheva |
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Country:
Russia |
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[28.10.2007 ] Agricultural risk management in Europe
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| This paper is based on a study performed by the IPSC-Agrifish unit of Joint Research Centre (JRC) of the European Commission for DG Agriculture under request of the European Parliament. Most information comes from fact sheets collected by experts or consultants in the different countries.
The definitions of crisis and disaster eligible for public aid in EU member states are analysed and compared with the “Community guidelines for state aid in the agriculture sector” (EC, 2000). New Commission Guidelines and a new Regulation have been adopted in December 2006.
The paper makes a review of the agricultural risks management systems in Europe (EU27) with a special focus on agricultural insurances. The different types of agricultural insurance
systems in Europe and key figures in each country are analysed. Some technicalities like reinsurance, triggers and deductibles are described. The relationship between Government involvement and insurance development is highlighted. Usually, private companies insure only hail and fire, but as the government involvement in insurance increases, more comprehensive coverage is provided by the insurance system, becoming possible the insuring of agricultural systemic risks.
The role of Governments is analyzed for every country: offering or subsidising insurances and providing aid ex-post. Aid related to risks in agriculture is also given on an ad-hoc basis or through compensation schemes or calamity funds, which can be partially financed by the agricultural sector on a voluntary or compulsory basis. Payments ad-hoc and from calamity funds in most European countries are summarised and their levels are compared.
The existing insurance level is generally insufficient to smooth significant income reduction in bad years. Risk management tools available in the MS could be developed further. However, given the heterogeneous situation, the interest of a harmonised EU-wide system of agricultural insurances is debatable. Conditions for a feasible EU-wide insurance scheme are analysed and classified into a) decisions of the policy makers (political criteria); b) decisions
of the private sector: insurers, re-insurers and farmers (socio-economic criteria); c) technical conditions. Last, the possible amount of costs of an EU-supported insurance system has been
roughly quantified for a few hypothetical scenarios, under given assumptions. |
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Author:
Agrifish Unit, JRC Ispra, Italy |
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Country:
Maria Bielza, Josef Stroblmair, Costanza Conte, Christoph Dittmann and Javier Gallego |
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[28.10.2007 ] Management of climate risks in the wine sector
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| In agriculture, there is need for a deeper analysis of management of climate risks, because the farmers appear to have a paradoxical position: they perceived that they are strongly exposed to climate risks but, they do not want to pay for adapted tools, arguing that this is too expensive or complex.
However, under risk, it is well-known that the decision-makers could be subject to paradox (Allais for example). Our assumption is that to know better the behaviours of farmers in general risky situations will help to understand their reluctance to use the weather market.
We conducted a study over the wine growers in the Maine-et-Loire department. 60 wine growers have responded to the questionnaire about climate risk management, and 29 amongst them have completed the second questionnaire about risky behaviours. |
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Author:
SANA BEN SALK, SERGE BLONDEL, CHRISTOPHE DANIEL, CATHERINE DEFFAINS-CRAPSKY, CATHERINE JUTARD AND BRUNO SÉJOURNÉ |
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Country:
France |
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[28.10.2007 ] Index based compensation for weather risk in the Italian agriculture
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| The paper explores the feasibility of the use of weather index based derivatives for farms’ risk
management in an Italian province. Based on a combination of detailed local weather data and
of data on farms’ yields, various possible weather indexes are found that are highly correlated
with yields of the major crops in the area. Simulations show that hedging through such index
based derivatives can be effective in protecting the stability of farms’ incomes, at a cost that is
likely to be much lower than that of the current system of subsidized crop insurance and expost
compensation. |
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Author:
CARLO CAFIERO*, FEDERICA ANGELUCCI, FABIAN CAPITANIO AND MICHELE VOLLARO |
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Country:
Italy |
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[28.10.2007 ] Revisiting the demand of agricultural insurance: The case of Spain
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| 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. |
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Author:
Alberto Garrido and David Zilberman |
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Country:
Spain |
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[28.10.2007 ] Risk management, vulnerability and risk perception of organic farmers in Spain
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| This study analyses the specific risks that organic farmers must manage. Due to the special
features of management of their productive system, and due to the specific characteristics of
their cultivations, they must face different risks than conventional farmers. Even if the
Spanish farmers rely on the insurance system to manage their risks, today organic farmers do
not have specific insurance products to manage them.
The methodology and results presented in this study include the following: First, the primary
information is compiled after the elaboration of more than 500 questionnaires to organic
farmers of diverse Spanish regions. Second, the risk analysis is carried out by evaluating
statistical, probabilistic, and stochastic properties of the organic production data. We evaluate
and discuss the aspects of our study that relate to other international studies. Productions
considered in this research are olive grove, vineyard, cereals, fruits, vegetables, nuts and,
citrus fruit.
Specific risks of organic farming – in contrast with conventional farming – have been
identified and quantified, showing the existing differences of perception, vulnerability and
risk management, as well as the different risk level and recovery after an event of adverse
climatic conditions. This research lays the foundations for the elaboration of a specific
agrarian insurance for organic productions, which will serve in a near future, as a tool for the
management of the specific risks of Spanish organic farmers. |
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Author:
Felipe Medina, Ana Iglesias, Carlos Mateos |
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Country:
Spain |
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[28.10.2007 ] Creating safety nets through semi-parametric index-based insurance: A simulation for Northern Ghana
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| In West Africa, farm income is highly exposed to risks from crop failure in the drier, inland areas, and from
fluctuations in (world market) prices in the wetter coastal areas. As individuals and even extended families are
poorly equipped to deal with these, provision of social safety nets is required Our paper reviews the situation in
Ghana and the way in which the new financial instrument of index-based insurance might contribute to better it,
focusing on the estimation of a crop indemnification scheme for farmers in Northern Ghana. It recalls that in a
poor rural area like Northern Ghana, provision of social safety almost coincides with food security management,
and must, therefore, distinguish three basic subtasks: distributing income entitlements (possibly indemnification
payments from insurance) to the poor, ensuring collection of taxes (possibly insurance premiums) to fund the
arrangement, and assuring delivery of staple goods, such as food to the all households, including the poor. We
point out that crop insurance, in any form can at best entitle the poor, and with adequate premiums, become
adequately funded, albeit that current experience suggests that farmers tend to be reluctant and to find it difficult
to fulfill their obligations. Our main remark is, however, that unless the actual availability of goods is assured,
the indemnification from crop insurance will under droughts only cause prices to rise and channel away scarce
food from the uninsured to the insured. In short, in poor areas such as Northern Ghana co-ordinated food
security management is key, particularly under severe droughts, with crop insurance possibly playing a role in
the spheres of entitlement and taxation. Turning to the modalities of crop insurance, we mention the advantages
of the index-based approach, which as compared to the individualized contracts of commercial insurance greatly
reduces transaction costs by basing the indemnification payments on objectively and easily measurable
variables, such as rainfall data collected at weather stations, and world prices of main export goods. Our
contribution is an improvement of the indemnification schedules. Rather than specifying a synthetic schedule or
estimating is as a parametric form, we estimate it as an optimal indemnification that minimizes farmers’ risk of
having their income drop below the poverty line, while restricting the indemnification to be an unknown
function of index variables on weather and prices. We adapt kernel learning technique to conduct this
estimation, so as to ensure that the schedule is self-financing, up to a subsidy. Our application is for Northern
Ghana where poverty is highest and farming conditions are most risky. We test the scheme’s performance as a
social safety net in terms of its capacity to reduce basis risk and alleviate poverty. Although our schedule
definitely outperforms the parametric forms, basis risk and associated poverty remain considerable. |
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Author:
Vasco Molini, Michiel Keyzer, Bart van den Boom and Wouter Zant |
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Country:
The Netherlands |
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[28.10.2007 ] Projections of economic impacts of climate change in agriculture in Europe
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| The objective of this study is to provide monetary estimates of the impacts of climate change in
European agricultural sector. The future scenarios incorporate socio-economic projections
derived from several socio-economic scenarios and experiments conducted using global climate
models and regional climate models. The quantitative results are based simulations using the
GTAP general equilibrium models system that includes all relevant economic activities. The
estimated changes in the exports and imports of agricultural goods, value of GDP and value of
world supply under the climate and socio-economic scenarios show significant regional
differences between northern and southern European countries. The simulations were based on
crop productivity changes that considered no restrictions in water availability for irrigation or
restrictions in the application of nitrogen fertilizer. Therefore the results should be considered
optimistic from the production point and pessimistic from the environmental point of view.
Water restrictions and socio-economic variables that modify the probabilities of change
occurring may also be considered in a later stage of the study. The monetary estimates show that
in all cases uncertainty derived from socio-economic scenarios has a larger effect than the
derive from climate scenarios. |
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Author:
SONIA QUIROGA, ANA IGLESIAS |
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Country:
Spain |
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[28.10.2007 ] Critical success factors for weather risk transfer solutions in the agricultural sector - a reinsurer's view
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| Agricultural yield and commodity prices are very sensitive to weather patterns such as
drought, excessive rain, or frost. As a result unseasonable weather can cause major losses for
players in the agricultural value chain, including input providers, farmers, commodity traders,
and food processors. The National Crop Insurance Service (NCIS) estimates that about 70%
of the losses suffered by the US crop insurance scheme result from drought or excessive
rainfall. In this paper information recorded by PriceWaterhouseCoopers on behalf of the
Weather Risk Management Association is complemented by Swiss Re’s market intelligence
to examine demand patterns for weather risk transfer solutions. There is a particular focus on
the evolution of demand from the energy sector compared to the agricultural sector as a means
of identifying the critical success factors needed for a prospering market. We found that
recent growth in the weather risk transfer market is mainly related to speculative trading in
the energy sector. Stakeholders in the agricultural sector around the world are growing
increasingly interested in weather risk transfer products. However, the lack of exchange-based
instruments in this field, the relatively high basis risk between weather indexes and
agricultural yield, the fact that agricultural markets are still highly regulated and inadequate
information and training are all impeding the growth of this business.
The largest exposure of the agricultural sector is related to systemic risks such as widespread
drought conditions, frost and heat waves. Using loss data gathered by the National Crop
Insurance Service (NCIS) from insurance companies participating in the US crop insurance
market (the world’s largest market providing extensive coverage for a large geographic area)
we estimate that about 80% of losses recorded during 1981 - 2003 result from large-scale
weather risks impacting yield over a prolonged period; i.e. drought (47%), wet conditions
(22%), frost (13%). Within the last few years, drought-related losses have occurred in the US
(2002), Europe (2003) and Australia (2006). For example, the hot and dry summer of 2003
caused an estimated loss of revenue to the agricultural sector in Europe of about EUR 10.7
billion (Swiss Re, 2004).
The introduction of Multi Peril Crop Insurance schemes (MPCI) gave farmers the ability to
protect themselves against nearly all systemic risks. This cover is widely used in the United
States, Canada, Spain, Portugal, and Israel; not least due to government subsidies. Other
stakeholders in the agricultural sector, such as input providers, commodity traders, food
processors and farmers, working in the majority of the worldwide agricultural markets, have
only limited or no access to MPCI cover and are therefore heavily exposed to weather risks.
Furthermore, farmers in markets where MPCI cover is available typically carry deductibles of
25-50% of the average expected yield and hence even those farmers are, albeit to a lesser
extent, exposed to the vagaries of the weather.
During the second half of the 1990s, US energy trading companies such as Enron, Aquila and
Koch developed weather derivatives. These energy traders were quickly joined by banks and
reinsurance companies who introduced the concept of weather derivatives and weather
insurance, referred to as weather risk transfer instruments in this paper, to other industry
sectors, such as agriculture, construction or tourism.
Therefore, agricultural sector stakeholders have had access to weather risk transfer
instruments for the last 5-10 years. It is therefore interesting to compare the development of
market demand for such instruments in the energy sector with demand in the agricultural
sector. We have done this by comparing the development of weather risk transfer instruments
for both industry sectors using data recorded by PriceWaterhouseCoopers (PWC) during its
annual survey of the weather markets on behalf of the Weather Risk Management Association
(WRMA) and market intelligence derived from Swiss Re teams acting in the agricultural and
weather markets. Our comparison revealed some success factors considered to be critical for
the further growth of weather risk transfer business within the agricultural sector. |
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Author:
Michael Roth, Christina Ulardic, Juerg Trueb, (Swiss Re) |
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Country:
Switzerland |
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[10.03.2008 ] Crop Hail Insurance Rate Making
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| Monetary loss as a result of hail damage to crops is a major hazard facing farmers in any areas of the United States. Crop-hail insurance provides a means for the farmer to protect his income from the consequences of this hazard. Knowledge of crop-hail ratemaking procedures is not widespread among casualty actuaries. This paper will attempt to introduce the reader to the basics of crop-hail insurance and some of the ratemaking procedures currently used in the industry. The paper begins with a brief background on the crop-hail industry, the standard crop-hail policy, claims adjustment, and data collection. The central focus of the paper is upon crop-hail pure premium estimation, the development of final rates, and an analysis of the pure premium estimation procedure. |
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Author:
Gary Josephson, Anita Klein, Therese Stom, Thomas Zacharias |
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Country:
USA |
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[10.03.2008 ] The rating of crop hail insurance
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| Crop-hail insurance is the name of that type of coverage which insures a farmer against loss resulting from hail damage to growing crops. Hail, though the basic hazard, is not the only peril insured against, as the crop-hail policy also provides protection, depending upon the crop and state, against fire, lightning, livestock, wind (when accompanied by hail), aircraft, and vehicles. |
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Author:
RICHARD J. ROTH |
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Country:
USA |
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[20.03.2008 ] Risk Analysis of the possible introduction of BTV and WNV
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| Outbreaks of Bluetongue virus (BTV) were recently reported on Sardinia in Italy (17 September) and on the Spanish island of Minorca (28 October). In addition, an article suggesting that BTV might reach Northern Europe as well appeared in the British press (The Guardian) only a short time earlier.
On 21 October, two people were reported to be infected with West Nile virus (WNV) in Southeastern France. It is assumed that this infection was contracted locally. In addition, antibodies against WNV were recently found in birds in the United Kingdom. Although the latter reports must still be further confirmed, a meeting of the working group “Arboviruses” of the European Committee in Brussels concluded that the introduction of WNV into (Northern) Europe is possible. |
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Author:
Elbers |
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Country:
Netherlands |
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[11.04.2008 ] Tomato diseases and disorders
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| Tomatoes are popular vegetable crops in many locations.
Many diseases and disorders can affect tomatoes during
the growing season. This publication describes the symptoms
and management of common problems found in
gardens and greenhouses. |
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Country:
USA |
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[11.04.2008 ] Ontario (Canada) - Risk Management Program Handbook
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| The Risk Management Program is a three-year price support program
designed to help Ontario grain and oilseed producers offset losses caused by low commodity prices. Funded partly by producers through premiums, payments are triggered when prices for grains and oilseeds fall below a specific support price, which is based on a cost
of production formula. RMP was designed in consultation with representatives of the grain and oilseed sector and the Ontario
Federation of Agriculture as part of the risk management package
offered to Ontario producers. RMP joins Production Insurance (PI) and
AgriStability as one more component of an effective risk management
package. The three-year pilot program was officially launched in August 2007. Once enrolled, producers must also participate in both the AgriStability and PI programs. |
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Author:
AgriCorp |
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Country:
Canada |
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[11.04.2008 ] Canada - Weather index insurance programs in Saskatchewan
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| Providing insurance beyond the core multi-peril Crop Insurance Program, weather derivative programs can be used in addition to existing coverage, or as stand-alone coverage for traditional and non-traditional crops. |
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Country:
Canada |
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[11.04.2008 ] Canada - Forage Crop Insurance Program in Saskatchewan province
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| Forage insurance provides protection for tame hay, greenfeed, dehydrated alfalfa and sweetclover acres against yield-loss caused by a number of natural hazards. |
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Country:
Canada |
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[24.06.2008 ] Poverty Traps and Climate and Weather Risk, Limitations and Opportunities of Index-based Risk Financing
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| This paper examines the linkage between climate and weather risks and
shocks and poverty traps by integrating diverse literatures on a wide range of related topics that enhance our understanding of how climate and weather shocks impact both poverty and development. That understanding is used to enlighten our evaluation of the potential developmental role of innovations in index-based risk financing for catastrophic climate and weather shocks. The objective of this paper is to frame the key issues and summarize the current state of knowledge about and innovations in index-based risk transfer
products (IBRTPs)2 as they relate to the management of climate risk for poverty reduction, especially of chronic or persistent poverty. In the past several years, interest in and experimentation with weather index insurance and other IBRTPs has grown rapidly. Though no one should expect that these innovations alone can solve the problem of chronic poverty, index-based financing opens up a
range of intriguing possibilities. |
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Author:
Christopher B. Barrett, Barry J. Barnett, Michael R. Carter, Sommarat Chantarat, James W. Hansen, Andrew G. Mude, Daniel E. Osgood, Jerry R. Skees, Calum G. Turvey and M. Neil Ward |
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Country:
International |
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[27.06.2008 ] Microinsurance - Making insurance work for the poor
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| This report is a summary of the Microinsurance Conference 2007 held in Mumbai, India, jointly hosted by the CGAP Working Group on
Microinsurance, the Munich Re Foundation and the Insurance Regulatory
and Development Authority (IRDA) with the support of GTZ and the World Bank. The need to further enhance risk management tools in developing countries remains acute. Most of the poor have no access to any kind of insurance, formal or informal. The potential of microinsurance as a way of extending social protection to excluded populations and opening up a new market for the insurance industry is huge. Four billion people are living on less than two dollars a day, and most are considered insurable. Providing microinsurance should not be seen as a separate policy goal, but rather as covering demand in a part of the insurance market. Microinsurance represents a specific market segment where products, distribution channels and regulations take the needs of the poor into account to offer them added value and to make them viable clients for insurers. |
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Author:
Munich Re |
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Country:
International |
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[24.03.2009 ] Risk Assessment - Blue Tongue
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| BTV primarily spreads via a vector (certain types of midges) and is not contagious. Practically no virus is found in the secretion and excretion products of infected animals. Moreover, BTV can also spread without mediation of this vector (via sperm, egg-cells and through contamination of the fetus). However, where the spread of BTV is involved, the route via the vector is by far the most important.
In the field, BTV is virtually exclusively transmitted from one vertebrate host to another by various types of stinging arthropods. The most important of these vectors are various types of Culicoides midges. |
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Country:
Netherlands |
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[24.03.2009 ] Catastrophic risks and insurance in farm-level decision making
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| Catastrophic risks can cause severe cash flow problems for farmers or even result into their bankruptcy. To cope with catastrophic risks farmers need to apply risk management strategies.
Insurance is a frequently used instrument to cover catastrophic risks. The main goal of the research is to analyse the actual farmer’s behaviour (descriptive approach) and to model the impact of catastrophe insurance purchase (prescriptive approach). Concerning insurance decisions to cope with catastrophic risks, the impact of farmer personal and farmer characteristics is important to consider. In this research, the impact of farmer’s personal risk characteristics
on catastrophe insurance purchase was mainly addressed. These characteristics are the farmer’s personal risk perception and his risk attitude.
The descriptive approach evaluated the impact of farm and farmer personal characteristics on actual insurance purchase in arable farming as well as in dairy farming. The first part of the descriptive analysis focused on the purchase of several general types of insurance (i.e., damage, disability, health and liability insurance and a combination of previous insurance covers). In the second part, more specific insurance covers were analysed (hail,
storm, brown rot, hail-fire-storm insurance for buildings, disability insurance, and insurance against epidemic animal disease outbreaks). The results showed that farm and farmer’s personal characteristics (including risk perception and risk attitude) had a significant impact
on actual (catastrophe) insurance purchase.
In the prescriptive analysis, the decision making problem describing how arable farmers can cope with catastrophic yield risks was modelled. The analysis focused in more detail on risk perception and risk attitude. For this purpose the results obtained from singlecrop
two-state risk models were compared with the results obtained from multi-crop multistate models (utility-efficient portfolio approach). The preferred options whether the decisions to insure and not to insure in terms of utility accounted either for farm income or
terminal wealth. The analysis showed that if a farmer makes decisions only in terms of an income-based utility function he is more prone to purchase catastrophe insurance. Those decision-makers who perceived that a risk would relatively seldom occur were less inclined
to insure and self-insurance would be preferable. However, if insurance decisions are made only on the basis of the single-crop two-state approach, they may differ from portfolio results because of alternative risk reducing options such as a diversification are not taken into account. |
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Author:
Victor A. Ogurtsov |
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Country:
Russia |
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[24.03.2009 ] Agricultural Insurance Revisited: New Developments and Perspectives in Latin America and the Caribbean
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| Agriculture is an inherently risky business. It is subject to a number of random price, climatic, biological, and geological shocks that require coping strategies and financial management instruments to deal with the implications. Traditional risk management strategies and ex post government provided emergency relief have often not proven to be sufficiently effective and robust in preventing serious economic loss or permitting a speedy recovery. This paper focuses on production risk management, explaining key concepts, understanding why crop insurance markets have been slow to develop, and making recommendations about how to build sustainable markets in developing country contexts.
For the most part, producers in developing countries are quite exposed to weather vagaries and have little access to formal agricultural insurance products that would allow them to transfer production risk to other parties. Agricultural insurance was more widespread in Latin America and other developing regions of the world during the 1960s and 1970s. However, most of the comprehensive, multiple peril programs common then, encountered financial difficulties and were either scaled back or completely closed. At present in Latin America, the volume of agricultural insurance premiums is a miniscule share of total insurance premiums. |
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Author:
Mark Wenner |
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[24.03.2009 ] Italy - agricultural insurance system
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| Description of the Italian insurance system. Presentation made at the conference in Russia in October 2008. |
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Author:
Paola Grossi |
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Country:
Italy |
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[21.04.2009 ] Microinsurance aspects in agriculture
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| Agricultural microinsurance in the context of this discussion paper involves the broad question of how low-income farmers close to or below the poverty level can be indemnified for agricultural losses due to severe weather conditions – regardless of the level of the insured (micro: individual; meso: community, farmer association, etc.; macro: national institution, government). In other words, it should be differentiated from the term “microinsurance” used purely to describe the level of the insured (individual). |
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Author:
Thomas Levin, Dirk Reinhard - Munich Re |
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Country:
Germany |
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[21.04.2009 ] Underwriting Area-based Yield Insurance to Eliminate ‘Risk Rationing’ and Crowd-in Credit Supply and Demand
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| Recent theoretical and empirical evidence suggests that risk (especially covariant risk that is correlated across producers) may discourage both the supply of agricultural credit and the willingness of small holders to utilize available credit and enjoy the higher expected incomes credit could make available to them. One possible resolution to this problem is to remove risk from the system by independently insuring it. However, conventional (all hazard) crop insurance has in almost every instance been rendered financially unsustainable by moral hazard and adverse selection problems. This parameter instead analyzes an area-based yield insurance scheme (where area yields are estimated using readily available weather information). While such insurance does not protect the farmer from all risks, our econometric analysis shows that it could have substantial value to the producer and could also
crowd-in credit supply from lenders reluctant to carry too carry too much covariant risk in their loan portfolios. We close by arguing that present and past public good failures justify public intervention in this area and analyze the feasiability of a publicly funded scheme to underwrite the costs and uncertainties associated with areabased yield insurance. |
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Author:
Michael R. Carter, Francisco Galarza and Stephen Boucher |
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Country:
USA |
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[26.04.2009 ] RMA - Prevented planting due to excess moisture or flood
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| A general overview of prevented planting coverage offered through different crop insurance programs. The overview is done on subsidized crop insurance programs offered in the USA to all farmers willing to participate. |
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Author:
Risk Management Agency |
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Country:
USA |
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[04.06.2009 ] USA - Opportunities Exist to Reduce the Costs of Administering Subsidized Crop Insurance Program
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| Between 2000 and 2009, companies’ A&O allowances nearly tripled, primarily because USDA’s calculation method for A&O allowances considers the value of the crop, rather than the crop insurance industry’s actual expenses for selling and servicing policies, which generally remained stable. This increase in the A&O allowances occurred without a proportional increase in the number of policies, acres, or amount of insurance coverage purchased. The higher A&O allowances occurred because of higher crop prices since 2006. Per policy, the allowance rose from a national average of $836 in 2006 to an expected $1,417 in 2009. Companies have used most of the higher allowances to raise commissions, in an effort to compete for insurance agencies’ portfolios of crop insurance policies. USDA data show that commissions increased more sharply in states with historically larger insurance underwriting gains, which add to company profits. For example, the average commission paid per policy in 5 Corn Belt states increased by 86 percent from 2006 to 2007, and by 43 percent in the other 45 states. Companies reported to USDA that their expenses to administer the program in 2007 exceeded their
allowances. However, GAO determined that these expenses exceeded
allowances largely because of the higher commissions paid to insurance agencies. |
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Author:
United States Government Accountability Office |
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Country:
USA |
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[23.08.2009 ] Experiences in Index-Based Weather Insurance for Farmers: Lessons Learnt from India & Malawi
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| The presentation provides an overview of the recent index insurance initiatives worldwide with a special accent on projects in India and Malawi. |
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Author:
Joanna Syroka |
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Country:
USA |
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[02.11.2009 ] Agricultural Risks in Brazil
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| Few Brazilian farmers take out insurance on their crops despite being aware of the financial impact of weather and commodity price risks. Improving insurance penetration in Brazil would be beneficial for all stake-holders. To achieve this goal, Swiss Re proposes a set of measures ranging from awareness building to strengthening the capacity of local insurers and developing a robust agricultural insurance framework. |
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Author:
Marc Tuller, Jose Cullen, Jurg Trub, Swiss Re |
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Country:
Switzerland |
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[25.11.2009 ] Public-Private Partnerships for Risk Management in Agriculture: Turkish Experience
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| TARSIM, a management entity, was established as a corporation by the insurance companies writing agricultural business in order to carry out all tasks of the Pool, within the context of the law. All insurance companies which have a licence for selling agricultural insurance shall participate to the agricultural insurance pool with equal shares. |
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Author:
Bülent BORA, Director General, TARSIM |
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Country:
Turkey |
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[25.11.2009 ] Decisions regarding crop reinsurance fund allocation - USA
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| The presentation provides explanation on how insurance companies in the US subsidized crop insurance system reinsure their portfolio |
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Author:
Jeffrey Pai |
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Country:
USA |
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[25.11.2009 ] The new risk management program in the US 2008 Farm Bill
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| The presentation provides an overview of the new risk management program in the USA as set by 2008 Farm Bill. Key elements are described including Direct Payments, Marketing Loan Deficiency Payments, Counter-cyclical payments and new ACRE initiative. |
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Author:
Holly Wang |
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Country:
USA |
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[25.11.2009 ] Study on Public Agricultural Insurance in China
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| Presently, China, which has set up four agricultural insurance companies, emphasizes the work in experimental units of agricultural policy insurance, and enlarges the area of experimental units. Through these experimental units explore different modes of China’s agricultural insurance, as well as establish policies to encourage commercial insurance companies participate in agricultural insurance. Based on Xinjiang mode, public agriculture insurance is a suitable mode for agricultural insurance in China. |
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Author:
Yu Zheng, Juan Zhang, Wangxi Wang |
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Country:
China |
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[25.11.2009 ] Structural change in turkish agricultural insurance policy and recent developments
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| Climate changes or global warming and related environmental effects have increased the importance of risk sharing for sustainability of agricultural production. Especially in the developing countries, the farmers have taken less action as compared to their colleagues in
the developed countries. Accordingly, the policy makers in developing countries have encouraged the farmers to attempt agricultural insurance against risks. There have been different
levels of subsidies on agricultural insurances implemented in several EU Member States. The aim of this paper is to analyze the effect of government-private partnership agricultural insurance system which has been practiced in Turkey since June 2006. |
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Author:
Harun Ucak, Ali Berk |
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Country:
Turkey |
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