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Crop Insurance Savings Accounts: A Viable Alternative to Crop Insurance?

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  • Colson, Gregory
  • Ramirez, Octavio A.
  • Fu, Shengfei

Abstract

This research explores the viability of an alternative design for crop insurance based upon farmer-owned savings accounts that are regulated, monitored, and marginally assisted by the government. Such accounts could be an effective risk management tool for many farmers and could operate without major government subsidization. Relative to the current program, the proposed design should exhibit minimal moral hazard and adverse selection problems, and since farm-level risk does not have to be priced, the proposed design eliminates the premium rating difficulties that weaken actuarial soundness and trigger the need for substantial external subsidies. In addition, administrative costs should be considerably lower.
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  • Colson, Gregory & Ramirez, Octavio A. & Fu, Shengfei, 2013. "Crop Insurance Savings Accounts: A Viable Alternative to Crop Insurance?," Faculty Series 146993, University of Georgia, Department of Agricultural and Applied Economics.
    • Handle: RePEc:ags:ugeofs:146993
    DOI: 10.22004/ag.econ.146993
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    References listed on IDEAS

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    1. Ramirez, Octavio A. & McDonald, Tanya U. & Carpio, Carlos E., 2010. "A Flexible Parametric Family for the Modeling and Simulation of Yield Distributions," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 42(2), May.
    2. Octavio A. Ramirez & Sukant Misra & James Field, 2003. "Crop-Yield Distributions Revisited," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 108-120.
    3. Ramirez, Octavio A. & Somarriba, Eduardo, 2000. "Risk And Returns Of Diversified Cropping Systems Under Nonnormal, Cross-, And Autocorrelated Commodity Price Structures," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(2), pages 1-16, December.
    4. Octavio A. Ramírez, 1997. "Estimation and Use of a Multivariate Parametric Model for Simulating Heteroskedastic, Correlated, Nonnormal Random Variables: The Case of Corn Belt Corn, Soybean, and Wheat Yields," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 191-205.
    5. Sukant K. Misra & Jeannie Nelson, 2003. "Efficient Estimation of Agricultural Time Series Models with Nonnormal Dependent Variables," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 1029-1040.
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    Cited by:

    1. Ramirez, Octavio A. & Shonkwiler, J. Scott, 2017. "A Probabilistic Model of Crop Insurance Purchase Decision," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 42(1), pages 1-17, January.
    2. Farrin, Katie & Miranda, Mario J., 2015. "A heterogeneous agent model of credit-linked index insurance and farm technology adoption," Journal of Development Economics, Elsevier, vol. 116(C), pages 199-211.
    3. Daniel Stein & Jeremy Tobacman, 2016. "Weather Insurance Savings Accounts," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 41(4), pages 677-700, October.

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    Keywords

    Agricultural and Food Policy; Agricultural Finance;

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