Purpose – The purpose of this paper is to examine a new insurance policy against natural disasters. Design/methodology/approach – The authors propose an optimisation model, which involves both the insurer and the farmer. The farmer decides to insure his farm if and only if insurance improves...

Purpose – The purpose of this paper is to analyze the effects of data aggregation and farm‐level crop acreage on the level of natural hedge, i.e. the level of price‐yield correlations, which is an important issue in risk modeling and management. Design/methodology/approach – Swiss FADN...

Purpose – The purpose of this research is to investigate the degree to which trends and structural change may have altered crop insurance expected loss cost ratios across time. Because loss experience is used to set rates for the program, these changes can impact the premiums paid by producers...

Purpose – The purpose of this paper is to be an academic inquiry into rating issues confronted by the US Federal Crop Insurance program stemming from changes in participation rates as well as the weighting of data to reflect longer‐run weather patterns. Design/methodology/approach – The...

Returns to a model farm are simulated to assess the impact of marketing and insurance risk management tools as measured by mean net returns and returns at 5% value‐at‐risk (VaR). Results indicate that revenue insurance strategies and strategies involving a combination of price and yield...

An economic analysis is presented of the Standard Reinsurance Agreement (SRA), the contract governing the relationship between the Federal Crop Insurance Corporation and the private insurance companies that deliver crop insurance products to farmers. The paper outlines provisions of the SRA and...

Crop insurance and pre‐harvest pricing strategies were analyzed for “all years” and “years following a normal crop year” scenarios for the 1986 through 2001 period in three Indiana counties. Crop insurance products and early spring pre‐harvest marketing generally had positive returns...

Asymmetric information in the form of moral hazard and adverse selection can result in sizable program costs for government‐provided crop insurance plans. We present a methodology and illustrative simulations to show how these two types of information problems interact in a way to create...

A utility maximization model is used to assess alternative risk management portfolios of Pacific Northwest non‐irrigated grain producers using three rotational practices. Risk management tools include hedging with wheat futures, yield insurance, two revenue insurance products (with and without...

Since 1980, the principal form of crop loss assistance in the United States has been provided through the Federal Crop Insurance Program. The Federal Crop Insurance Act of 1980 was intended to replace disaster programs with a subsidized insurance program that farmers could depend on in the event...