Purchase of Catastrophe Insurance by Dutch Dairy and Arable Farmers

Abstract

This article analyzed the impact of risk perception, risk attitude, and other farmer personal and farm characteristics on the actual purchase of catastrophe insurance by Dutch dairy and arable farmers. The specific catastrophe insurance types considered were hail-fire-storm insurance for buildings, disability insurance, crop insurance against hail, storm, and brown rot, and insurance against epidemic animal disease outbreaks. The results suggested that risk perception was a significant variable that influenced purchase of catastrophe insurance by dairy and arable farmers, whereas risk attitude was significant only in arable farming.

Risks in the farms in Poland and their financing – research findings

“…More detailed analyses of demand for crop insurance, i.e. the factors which really affect the purchase of insurance and future demand forecasts are usually focused on other markets, mainly in the US [Coble et al 1996;Goodwin, Vandeveer, Deal 2004;Mishra, Goodwin 2003;Sherrick et al 2004;Garrido, Zilberman 2008;Ogurtsov, Van Asseldonk, Huirne 2009].…”

Farmers’ willingness to invest in livestock disease control: the case of voluntary vaccination against bluetongue

“…These differences in perceived risk also indicate that farmers might not be commonly risk averse, as is often assumed (Ogurtsov et al, 2009;Hardaker et al, 2015). However, farmers' preferences for risk are also domain-specific (Weber et al, 2002;Hansson and Lagerkvist, 2012).…”

“…An empirical study by Ogurtsov et al (2009) that looked into Dutch dairy farmers buying different categories of catastrophe insurance, reported that the impact of assumed risk aversion on buying insurance was not found for those related to insuring animal disease epidemics. The authors argued that it was hard for farmers to estimate the probability of occurrence of an outbreak and therefore they may underestimate potential risks.…”

“…A second group of background variables that can explain heterogeneity in beliefs are so-called behavioural variables. An important concept here is perceived risk in relation to animal disease epidemics, captured by a risk attitude (risk preference) and risk perception of the farmer (Meuwissen et al, 2001;Flaten et al, 2005;Ogurtsov et al, 2009;Valeeva et al, 2011) and personality traits (e.g. Austin et al, 2001).…”

“…The voluntary participation in pre-outbreak animal disease insurances was studied with special attention to the risk attitude and/or risk perception of farmers (Ogurtsov et al, 2009;Niemi and Heikkilä, 2011). For vaccination -that might be considered as insurance before, during or after an epidemic -the collective effectiveness of a voluntary campaign was studied for a theoretical endemic disease comparable to Bovine Viral Diarrhoea (Rat-Aspert and Fourichon, 2010).…”