Author
Listed:
- NAN Anca-Petruta
(Department of Finance and doctoral student, Faculty of Economics and Business Administration, Babes - Bolyai University, Cluj-Napoca, Romania,)
Abstract
In spite of the development possibilities, the agriculture in Romania is becoming a risky environment, because of the extreme weather events but also because of the lack of organization and the lack of involvement of the authorities in diminishing their effects. We can say that the performance of this sector, as well as its efficiency, depends directly of the competence of the government, the agricultural producers and the insurance agencies to reduce the specific risk for which is necessary a constant level of investment. The most used method in reducing the agricultural risk is multiple insurance, but, this insurance product does not benefit of the attention that it is worthy of, mainly because of the reduced level of income from the rural area as well as the deficient infrastructure. The high level of complexity of harvesting agricultural exploitations, the breeding of animals as well as the conditions in agriculture has made the evolution of activities in this domain to be increasingly harder, reason why there is a search for new options to reduce/eliminate risks at which the agricultural producers are exposed to namely the proposal of implementing insurance based on indexes. The purpose of the study consists of presenting a new tool in view of developing agriculture and agricultural insurance, thus new tools are being added to the ones and they bring two new attractive characteristics namely they eliminate many of the existent problems in traditional insurance of agricultural crops (moral hazard, adverse selection, bigger costs of transaction), making them more viable and less dependent on public subventions, thus being a new and useful instrument which is being added to the instruments that the Romanian government has at its disposal to manage the risks in agriculture better and more efficiently. Insurance based on indexes can help at avoiding the unwanted risks specific to this sector. This, combined with other improved instruments of managing risk, either ex ante (better irrigation systems, better adapted breeds, better plans for flood prevention, better counselling services) or ex post (improvement of offered services from insurance agencies) are powerful instruments for efficient managing of risks in agriculture.
Suggested Citation
NAN Anca-Petruta, 2013.
"Study About The Usage Of Agricultural Insurance Based On Indexes In Romania,"
Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 331-338, December.
Handle:
RePEc:ora:journl:v:1:y:2013:i:2:p:331-338
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