Microinsurance Aspects in Agriculture

This paper examines agricultural microinsurance to indemnify low-income farmers for agricultural losses due to severe weather conditions. The wide range of risks in agriculture requires a comprehensive risk management strategy including insurance solutions and risk prevention measures such as crop diversification and asset accumulation. Although demand for microinsurance solutions for small farmers in developing countries is huge, supply side constraints and challenges prevent private sector involvement. Developments such as index based insurance products, risk layering and pooling strategies have triggered new initiatives and pilot projects in agricultural insurance. Presenting case studies showcasing recent introduction of agricultural microinsurance, the paper concludes that:

• Clear definition of the target group of small and poor farmers is still missing in agricultural insurance in developing countries;
• Further research to explore the determining factors of poverty among farmers is needed;
• Compilation of all relevant factors will help individual countries to establish their own definitions of poor farmers.