Revisiting the demand for agricultural insurance: the case of Spain

This paper focuses on the demand for agricultural insurance in Spain

Alberto Garrido

2010

Scholarcy highlights

  • The literature on agricultural insurance seems to provide very few succesful examples
  • In the European Union, the private sector provides basic coverages for a very limited number of hazards, indicating that many of the risks and hazards to which farmers are exposed cannot be insured by private insurance companies
  • This paper focuses on the demand for agricultural insurance in Spain
  • The inclusion of βt ensures that more weight is placed on the most recent years up to t ensures. This is the way we introduce a slight degree of memory in the construction of variances, in the same vein as Holt and Chavas did
  • When expected benefits are very high, a reduction of 0.25 points in expected benefits would reduce insurance counts by 0.02, if Vart-1=0.3, and by 0.20, if Vart-1=0.6. These results indicate that farmers respond to premium subsidies, and the way their expected benefits from insurance are driven by the actual cost of premia, but they are significant more responsive to the variance of the expected benefits
  • Results show that farmers’ insurance uptaking are robustly explained by these three variables describing the observed economic returns from insurance and its variability are enough to explain insurance demand patterns found across widely different agricultural conditions
  • Poisson model) provide consistent results, and show evidence of farmers being responsive to our measures of the patterns of economic returns to agricultural insurance

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