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Combining participating insurance and financial policies

Author

Listed:
  • Geoffroy Enjolras
  • Robert Kast

Abstract

Purpose - The purpose of this paper is to examine a new insurance policy against natural disasters. Design/methodology/approach - The authors propose an optimisation model, which involves both the insurer and the farmer. The farmer decides to insure his farm if and only if insurance improves the utility he is expecting over a given year. Therefore, the paper takes the perspective of an insurer who wants to maximise the farmer's wealth, so that he will be more likely to subscribe the policy. The choice and combination of the policies are then determined and designed by the insurer to reach that aim. Findings - The paper proves that the market for insurance could grow with a combination of participating contracts and market‐based instruments. The first cover individual risks while the second cover systematic risks. Practical implications - The new policy leads both the insurer to manage small and large risks and the insured to be financially interested. It also provides an optimal coverage against natural events for insured farmers. Originality/value - The paper offers many perspectives for the renewal of the crop insurance market using new instruments.

Suggested Citation

  • Geoffroy Enjolras & Robert Kast, 2012. "Combining participating insurance and financial policies," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 72(1), pages 156-178, May.
    • Handle: RePEc:eme:afrpps:v:72:y:2012:i:1:p:156-178
    DOI: 10.1108/00021461211222231
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    References listed on IDEAS

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    Cited by:

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    2. Assa, Hirbod & Sharifi, Hossein & Lyons, Andrew, 2021. "An examination of the role of price insurance products in stimulating investment in agriculture supply chains for sustained productivity," European Journal of Operational Research, Elsevier, vol. 288(3), pages 918-934.
    3. Ayenew, Habtamu Yesigat & Sauer, Johannes & Abate-Kassa, Getachew, 2016. "Cost of Risk Exposure, Farm Disinvestment and Adaptation to Climate Uncertainties: The Case of Arable Farms in the EU," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235595, Agricultural and Applied Economics Association.
    4. Martin Eling, 2013. "Recent Research Developments Affecting Nonlife Insurance—The CAS Risk Premium Project 2011 Update," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 16(1), pages 35-46, March.
    5. Malin Song & Qianqian Du, 2019. "Analysis and exploration of damage-reduction measures for flood disasters in China," Annals of Operations Research, Springer, vol. 283(1), pages 795-810, December.

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