We theoretically examine a farmer’s coverage demand with area and individual insurance plans as either separate or integrated options. The individual and area losses are assumed to be imperfectly and positively correlated. With actuarially fair rates, the farmer will fully insure with the...

The effect of sampling error in estimation of farmers’ mean yields for crop insurance purposes is explored using farm-level corn yield data in Iowa from 1990 to 2000 and Monte Carlo simulations. We find that sampling error combined with nonlinearities in the insurance indemnity function will...

Agricultural insurance in Ukraine is mostly offered on the basis of traditional products includingPMCI, named perils and single peril coverage. The index concept was introduced in 2001 thoughuntil 2005 the insurance companies provided index crop insurance through area-based yield indexprogram....

The twin problems of moral hazard and adverse selection are often blamed for the lack of insurance for many fruits and vegetables. This paper develops an alternative method of testing for adverse selection that uses a two-stage approach to determine the effects of technical inefficiency on the...

The EPA has imposed mandatory refuge requirements for Bt crops to prolong the efficacy of Bt. Growers have no economic incentive to plant the required refuge because refuge crops are on average less productive and more risky. This paper evaluates refuge insurance—insurance thatpays indemnities...

The successful expansion of the U.S. crop insurance program has not eliminated ad hoc disaster assistance. An alternative currently being explored by members of Congress and others in preparation of the 2007 farm bill is to simply remove the "ad hoc" part of disaster assistance programs by...

Malt barley is an important specialty crop in the Northern Plains and growers mitigate risk with federally subsidized crop insurance and production contracts. However, growers face considerable risk due to "“coverage gaps"” in crop insurance that result in uncertain indemnity payments due to...

This paper investigates the farm level impacts of multiple peril yield and revenue insurance in an expected value-variance framework. The analysis is conducted using stochastic simulation jointly with numerical optimisation. Simulation is used to compute the means and variances of revenues as...

Proposals for reform of the federal multiple-peril crop insurance program for specialty crops seek to change fees for catastrophic (CAT) insurance from a nominal fifty-dollar per contract registration fee to an actuarially sound premium. Growers argue that this would cause a significant...

This study examines the actuarial implications of the loss cost ratio (LCR) ratemakingmethodology employed by the Risk Management Agency as a component of base ratesfor U.S. crop insurance programs, and identifies specific conditions required for the LCRmethodology to result in unbiased rates...