Crop Insurance Products

ttere are basicallyfour different groups of crop insurance products:

1. Loss insurance (hail and named peril) with fixed sums insured (e.g. hail insurance in Europe) or adjustable sums insured (e.g. cotton insurance in Australia)

2. Yield guarantee insurance (MPCI) with coverage of regional average yield (e.g. new MPCI programs) or individual historic yields (APH) (e.g. MPCI in USA, Spain)

3. Index insurance with meteorological triggers (single parameters or indices), area yield triggers (e.g. Group Risk Plan in USA), vegetation indices (increasing use of satellite data) and modelling of yields (a current example being the grassland programme in Spain)

4. Revenue insurance with covers comprising yield and price elements, which are only feasible for crops traded in existing commodity markets and boards of trade.

tte requirements for successful crop insurance programmes are the control of anti-selection and the moral hazard, risk-adequate rates (exposure, crop type, fluctuation) facilitated by premium subsidies, regional differentiation of rates, sufficient market penetration as well as coverage levels and deductibles geared to the specific exposure. Figure 21.6 shows the 2005 premium levels of multi-peril crop insurance (MPCI) and crop hail insurance in different markets.

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