Resumen
A substantial literature has analyzed the challenges around weather index insurance, yet an important design issue has been generally overlooked. Most index insurance products have so far been characterized by a one-size-fits-all payout structure, intended for a representative farmer, at the cost of ignoring considerable heterogeneity in risk profiles. This paper provides unique evidence on the ways in which heterogeneity in farmers’ risk exposure affects their demand for insurance. We analyze a set of flexible insurance products against excess rainfall and exploit the substantial variation in insurance portfolios demanded by farmers. We explore the relevance of alternative sources of heterogeneity by extending a simple expected utility decision model and relying on structural estimation to test their significance. We find important aspects of farmer heterogeneity directly affecting their demand for insurance. We quantify the benefits of a flexible scheme by comparing farmer welfare to that achieved under alternative counterfactual insurance options.
| Idioma original | Inglés |
|---|---|
| Número de artículo | 102515 |
| Publicación | Journal of Development Economics |
| Volumen | 146 |
| Fecha en línea anticipada | 6 jun. 2020 |
| DOI | |
| Estado | Publicada - set. 2020 |
Nota bibliográfica
Funding Information:The project implementation was the result of the invaluable joint work of a number of partners, including Domingo Quintans, Nestor Gandelman, and Braulio Britos, together with teams at IADB Montevideo, OPYPA, MGAP, Banco de Seguros del Estado, INUMET, and Grupo Radar, among others. The initial guidance on how to approach the analyses in this study was generously provided by Igal Hendel. The current manuscript benefitted from useful discussions and comments from Matteo Bobba, Glenn Harrison, Manuel Hernandez, Berber Kramer, Oliver Musshoff, Matin Qaim, John Rust, Maximo Torero, and an anonymous referee. We also thank participants at the Georgia State University’ CEAR Academic Pre-Conference 2017, the Microinsurance Conference 2017, and IFPRI’s seminars. Funding support was provided by the Inter-American Development Bank and the CGIAR Research Program on Policies, Institutions, and Markets (PIM). The opinions expressed here belong solely to the authors.
Funding Information:
The project implementation was the result of the invaluable joint work of a number of partners, including Domingo Quintans, Nestor Gandelman, and Braulio Britos, together with teams at IADB Montevideo, OPYPA, MGAP, Banco de Seguros del Estado, INUMET, and Grupo Radar, among others. The initial guidance on how to approach the analyses in this study was generously provided by Igal Hendel. The current manuscript benefitted from useful discussions and comments from Matteo Bobba, Glenn Harrison, Manuel Hernandez, Berber Kramer, Oliver Musshoff, Matin Qaim, John Rust, Maximo Torero, and an anonymous referee. We also thank participants at the Georgia State University’ CEAR Academic Pre-Conference 2017, the Microinsurance Conference 2017, and IFPRI’s seminars. Funding support was provided by the Inter-American Development Bank and the CGIAR Research Program on Policies, Institutions, and Markets (PIM). The opinions expressed here belong solely to the authors.
Funding Information:
The insurance units scheme was implemented in the context of a project led by the International Food Policy Research Institute (IFPRI), with support from the Uruguayan Ministry of Agriculture (MGAP) and Banco de Seguros del Estado (BSE), the federal insurance agency in charge of underwriting and marketing. The project's main objective was to cover horticultural farmers? excess rainfall risk around harvest, associated to severe losses from rotting of crops and difficulties in accessing flooded plots. The products were offered commercially to all horticultural farmers in the department of Canelones, the main horticultural region in Uruguay, during the 2014-15 summer harvest season. The marketing of the product was carried out through the existing network of BSE insurance brokers, who held pre-existing relationships with farmers in the area. The project implementation was the result of the invaluable joint work of a number of partners, including Domingo Quintans, Nestor Gandelman, and Braulio Britos, together with teams at IADB Montevideo, OPYPA, MGAP, Banco de Seguros del Estado, INUMET, and Grupo Radar, among others. The initial guidance on how to approach the analyses in this study was generously provided by Igal Hendel. The current manuscript benefitted from useful discussions and comments from Matteo Bobba, Glenn Harrison, Manuel Hernandez, Berber Kramer, Oliver Musshoff, Matin Qaim, John Rust, Maximo Torero, and an anonymous referee. We also thank participants at the Georgia State University? CEAR Academic Pre-Conference 2017, the Microinsurance Conference 2017, and IFPRI's seminars. Funding support was provided by the Inter-American Development Bank and the CGIAR Research Program on Policies, Institutions, and Markets (PIM). The opinions expressed here belong solely to the authors.
Publisher Copyright:
© 2020 The Authors
Palabras clave
- Farmer heterogeneity
- Flexible insurance
- Multiple discreteness
- Structural estimation
- Uruguay
- Weather index insurance
ODS de las Naciones Unidas
Este resultado contribuye a los siguientes Objetivos de Desarrollo Sostenible
