Observatorio de I+D+i UPM

Memorias de investigación
Research Publications in journals:
Evaluating the potential of whole-farm insurance over crop-specific insurance policies
Year:2009
Research Areas
  • Agricultural policy
Information
Abstract
Since 1996, different formats of whole-farm insurance (WFI) have been launched in North America and Spain. Their rationale is to pool all farm¿s insurable risks into a single policy that provides cheaper coverage against the farm¿s revenue losses. We evaluate the gains of moving from a situation of full insurance coverage delivered by crop-specific policies to WFI. Based on the records of individual farmers gathered by the Spanish Agricultural Insurance Agency (ENESA), we select two representative farms in Valencia that have consistently purchased insurance during 1993-2004 for three crops (apricots, plums and wine grapes). WFI is designed to deliver exactly the same expected revenue than does the combined effects of three crop-specific multiple-peril insurance policies, covering from the same risks. We carry out Monte-Carlo simulations to compare crop-specific insurance with WFI, looking at premium differences, farms¿ revenues, and farmers¿ utilities (DARACRRA). From ENESA¿s database we evaluate the parameters of the yield distribution functions, the eligible losses distribution functions and their correlation. Results show that WFI is slightly superior to crop-specific insurance. Premia are 20% cheaper, and certainty equivalents slightly larger. Yet, the left tail of the revenue distribution is only weakly reduced by either insurance strategy, due to crop risks that are not covered by either policy. The main conclusion is that, if crop-specific insurance is sufficiently mature, farmers would benefit from WFI and Governments would enhance the efficiency of their insurance subsidies.
International
Si
JCR
Si
Title
SPANISH JOURNAL OF AGRICULTURAL RESEARCH
ISBN
1695-971X
Impact factor JCR
0,388
Impact info
Volume
7
Journal number
1
From page
3
To page
11
Month
ENERO
Ranking
Participants
  • Autor: María Bielza
  • Autor: Alberto Garrido Colmenero (UPM)
Research Group, Departaments and Institutes related
  • Creador: Grupo de Investigación: Economía Agraria y Gestión de los Recursos Naturales
  • Centro o Instituto I+D+i: Centro de Estudios e Investigación para la Gestión de Riesgos Agrarios Medioambientales (CEIGRAM)
  • Departamento: Economía y Ciencias Sociales Agrarias
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