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Multiple-peril crop insurance: successes and challenges

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  • Barry Barnett

Abstract

Purpose - – The purpose of this paper is to examine international experience with multiple-peril crop insurance (MPCI). Named peril crop insurance is available in most countries but MPCI is less common. While named peril insurance is widely successful, MPCI has a checkered history. In most cases, MPCI actuarial experience has been poor and large premium subsidies have been required to incentivize purchasing. Design/methodology/approach - – International experience with MPCI is reviewed with a particular focus on the USA which has the largest MPCI program in the world. Rationales for government involvement in facilitating MPCI offers are examined and future challenges are explored. Findings - – In most cases, MPCI actuarial experience has been poor and large premium subsidies have been required to incentivize purchasing. MPCI purchasing has increased dramatically in recent years but so have government expenditures to support MPCI programs. Significant challenges remain with providing cost-effective MPCI coverage for crop farmers. Originality/value - – While previous articles have reviewed MPCI in the USA, this paper also considers experiences in other countries. Future challenges and research needs are described.

Suggested Citation

  • Barry Barnett, 2014. "Multiple-peril crop insurance: successes and challenges," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 74(2), pages 200-216, July.
    • Handle: RePEc:eme:afrpps:v:74:y:2014:i:2:p:200-216
    DOI: 10.1108/AFR-11-2013-0040
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    Cited by:

    1. Ho, Shuay-Tsyr & Ifft, Jennifer E. & Rickard, Bradley J. & Turvey, Calum G., 2018. "Alternative Strategies to Manage Weather Risk in Perennial Fruit Crop Production," Agricultural and Resource Economics Review, Cambridge University Press, vol. 47(3), pages 452-476, December.
    2. William M. Fonta & Safietou Sanfo & Abbi M. Kedir & Djiby R. Thiam, 2018. "Estimating farmers’ willingness to pay for weather index-based crop insurance uptake in West Africa: Insight from a pilot initiative in Southwestern Burkina Faso," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 6(1), pages 1-20, December.
    3. Katherine Baldwin & Anne Effland, 2022. "Integrating prevention into the risk management policy toolkit: A strategy for improving resilience to extreme events," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1222-1240, September.
    4. Kulawik, Jacek, 2023. "Expected Utility and Prospect Theories Versus Agricultural Insurance," Problems of Agricultural Economics / Zagadnienia Ekonomiki Rolnej 333731, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    5. Yong Liu & A. Ford Ramsey, 2023. "Incorporating historical weather information in crop insurance rating," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(2), pages 546-575, March.

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    Keywords

    Risk; Crop insurance;

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