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MILK Brief #34: Agricultural insurance: high potential but low demand

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MILK Brief #34: Agricultural insurance: high potential but low demand

Farmers everywhere face huge and varied risks, including weather uncertainty, pests, disease, and price volatility. Rural households in developing countries are especially vulnerable to these risks because they often derive a large portion of their income from agriculture. While they draw on many different tools to manage these risks, a large gap remains in their ability to do so. Good agricultural insurance products can also be useful if they encourage farmers to take “good” risks – for example by investing in more weather-sensitive but more profitable crops – and may also make lenders more willing to lend to farmers that they would otherwise consider too risky. 

Despite all of these potential benefits, demand for agricultural microinsurance products remains almost universally low. This brief explores possible reasons why. We begin with a review of literature that suggests that farmers might obtain value from good agricultural microinsurance products and then explore some of the possible reasons why demand for these products is still low. Low take-up may be explained by poorly designed products, potential clients’ failure to understand products’ value, or ineffective marketing. It might also be that the programs being studied do not have all the potential benefits that we might expect of them. 

File Name: MILK Brief 34 - Agricultural insurance.pdf
File Type: application/pdf
Download: 1860 times
Created Date: 06-26-2014

Quote of the Day

"We see quite decent profits in microinsurance, and I am no longer worried about profits in this business" - Martin Hintz Emerging Consumers, Allianz SE

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