Is Agricultural Insurance Fulfilling Its Promise for the Developing World? A Review of Recent Evidence

Abstract

Innovations in agricultural index insurance have raised expectations that the private sector can overcome shortcomings associated with more traditional indemnity-based products like multiperil crop insurance and strengthen agricultural risk management at scale across developing countries. This article updates previous reviews on agricultural insurance but differs in that it goes beyond the prognosis that recent innovations can help make insurance more commercially viable. As such, it addresses two important challenges that have received limited attention. First, it distinguishes different types of farm households and recognizes that many are excluded from the insurance market, describing additional innovations that can help make insurance more accessible to these excluded groups. Second, it acknowledges that insurance for catastrophic risks is unaffordable for most farmers and summarizes new developments in disaster assistance and safety net programs that can provide broader protection against these risks. The review concludes that cost-benefit analyses of subsidized insurance programs will be crucial for guiding public spending decisions. Expected final online publication date for the Annual Review of Resource Economics, Volume 14 is October 2022. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Selection of an Insurance Company in Agriculture through Hybrid Multi-Criteria Decision-Making

“…Farmers do not have to choose these insurance options because they do not affect crop insurance but rather provide additional insurance for the farmer’s machinery, facilities, etc. In this way, the farmer wants to ensure additional security by taking additional services from insurance companies [ 31 ]. The reason for this is climate change [ 50 ], which is increasingly affecting agricultural production.…”

“…Additional insurance is used by insurance companies to offer more services to farmers as part of their crop insurance. Farmers may want additional insurance to provide them with additional protection [ 31 ]. Insurance companies may offer farmers additional benefits and discounts for this additional insurance.…”

Do Index Insurance Programs Live up to their Promises? Aggregating Evidence from Multiple Experiments

“…It is not clear on which dimension we should focus. For reviews on both aspects, see Binswanger-Mkhize (2012), Miranda and Farrin (2012), Marr et al (2016), Carter et al (2017), Cole and Xiong (2017), , Platteau et al (2017), Clement et al (2018), Ali et al (2020), andKramer et al (2022). of farmers could in fact crowd-out productive investments (especially in contexts with deficient credit markets).…”

Digital opportunities for the distribution of index‐based microinsurance: Evidence from a discrete choice experiment in Mali

“…Nonetheless, adoption rates remain surprisingly low. Prevalent adoption barriers on the demand side include limited insurance understanding, lack of trust and liquidity constraints, while commonly cited supply side barriers are basis risk, prohibitively high insurance premiums, and complex contract designs (Kramer et al., 2022; Platteau et al., 2017).…”