Innovations in Agricultural and Natural Disaster Insurance
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Recent innovations in financial markets bring about new instruments that can be used to provide insurance for agricultural risks. The advantages of index-based insurance contracts make them an attractive tool for risk transfer. In the case of developing countries, index-based insurance allows government to develop agricultural insurance within the country and to transfer the non-diversifiable component of country’s risk to the global markets at highly reduced transaction cost. New institutions have to be formed to implement such a scheme, but the simplicity and transparency of index-based contracts makes those changes easier to implement than with traditional insurance.
author list (cited authors)
Miranda, M., & Vedenov, D. V.