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The effects of weather risks on micro-regional agricultural insurance premiums in Hungary

Author

Listed:
  • Kemeny, Gabor
  • Varga, Tibor
  • Fogarasi, Jozsef
  • Nemes, Attila

Abstract

This paper examines the effects of territorial differentiation of damage to wheat, maize, barley, sunflower and rapeseed production caused by drought and heavy rain. Our study evaluated the differences between LAU1 micro-regions in Hungary in the effects of the weather on agricultural production and found that there are extremely high differences in the probabilities of damage occurring. Therefore the design of agricultural insurance products should be based on different absolute deductibles and different insurance premiums for micro-regions. Furthermore, we found that within a micro-region individual producers face a very high diversity of risks which implies that in the long term only a bonus-malus system developed for individual agricultural producers can mitigate different risks, and that this can be the basis of a well performing risk management system that is suitable for a wide risk community.

Suggested Citation

  • Kemeny, Gabor & Varga, Tibor & Fogarasi, Jozsef & Nemes, Attila, 2013. "The effects of weather risks on micro-regional agricultural insurance premiums in Hungary," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 115(1), pages 1-8, February.
    • Handle: RePEc:ags:stagec:146814
    DOI: 10.22004/ag.econ.146814
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    References listed on IDEAS

    as
    1. Chambers, Robert G., 2007. "AJAE Appendix: Valuing Agricultural Insurance," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 89(3), pages 1-2, August.
    2. Vincent H. Smith & Joseph W. Glauber, 2012. "Agricultural Insurance in Developed Countries: Where Have We Been and Where Are We Going?," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 34(3), pages 363-390.
    3. Robert G. Chambers, 2007. "Valuing Agricultural Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 596-606.
    4. Vincent H. Smith & Joseph W. Glauber, 2012. "Agricultural Insurance in Developed Countries: Where Have We Been and Where Are We Going?," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 34(3), pages 363-390.
    5. Sporri, Martina & Baráth, Lajos & Bokusheva, Raushan & Ferto, Imre, 2012. "The Impact of Crop Insurance on the Economic Performance of Hungarian Cropping Farms," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122525, European Association of Agricultural Economists.
    6. Kemény, Gábor & Varga, Tibor & Fogarasi, József & Tóth, Kristóf, 2012. "The development of Hungarian agricultural insurance system," Problems of World Agriculture / Problemy Rolnictwa Światowego, Warsaw University of Life Sciences, vol. 12(27), pages 1-10, September.
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    Cited by:

    1. Kemény, Gábor & Rieger, László, 2015. "Development Of The Weather Risk Management System In The Hungarian Agriculture," Journal of Central European Green Innovation, Karoly Robert University College, vol. 3(4), pages 1-9.
    2. Nadezda JANKELOVA & Dusan MASAR & Stefania MORICOVA, 2017. "Risk factors in the agriculture sector," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 63(6), pages 247-258.
    3. Sulewski, Piotr & Kłoczko-Gajewska, Anna, 2014. "Farmers’ risk perception, risk aversion and strategies to cope with production risk: an empirical study from Poland," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 116(3), pages 1-8, December.

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