Natural disasters hit hard. They may cause heavy losses to farmers and forest owners. Insurance can assist in managing these losses, and crop insurance is that branch of this financial mechanism that is especially geared to covering losses from adverse weather and similar events beyond the control of growers.
Agriculture is an inherently risky business. It is subject to a number of random price, climatic, biological, and geological shocks that require coping strategies and financial management instruments to deal with the implications. Traditional risk management strategies and ex post government provided emergency relief have often not proven to be sufficiently effective and robust in preventing serious economic loss or permitting a speedy recovery.
The purpose of this publication is to meet the demand for a brief, accessible introduction to the role of insurance as a risk management mechanism in livestock and aquaculture enterprises. With the focus of the book being on enterprises in developing countries, most attention is given to livestock (especially cattle, sheep, goats, poultry) kept for food and/or fibre, and transport/motive power, rather than bloodstock used for sporting and recreational purposes.
Rural finance is about managing risk. Lenders can effectively pool and aggregate risk held by a large number of borrowers if the risk they face is largely independent. A major advantage of microfinance entities and other forms of collective action has been the ability to pool risk. However, correlated risk can not be pooled.
Poor households with little or no wealth are particularly vulnerable to risks that reduce incomes and increase expenditures. This paper addresses many of the risk-coping strategies for the rural poor, with a focus on micro level and household actions. Largely, these discussions concern risks that can be shared within a community or extended family.
Why are demand and renewal rates for microinsurance so low despite the important protection it may offer? To address the puzzle this paper provides a selective overview of the current state of research on demand for microinsurance. It first looks at the theoretical research and then reviews the empirical evidence on the factors influencing demand for insurance.
We explore two theories that have been advanced to explain the patterns in U.S. catastrophe reinsurance pricing. The first is that price variation is tied to demand shocks, driven in effect by changes in actuarially expected losses. The second holds that the supply of capital to the reinsurance industry is less than perfectly elastic, with the consequence that prices are bid up whenever existing funds are depleted by catastrophe losses.
Climate change, combined with an expanding risk universe, has led to a significant rise in the frequency and amount of claims paid by insurers and reinsurers over the past three decades. Major 21st century challenges, such as adapting to climate change, food security, and the development of renewable energy, have turned the spotlight on the ties that bind man to his environment.
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