As many of the world’s poor households are living in environments where risk is a daily reality. agricultural insurance is re-emerging as a topic of interest to farmers, policy makers, insurance companies, and development finance institutions. If we can overview of agricultural insurance in selected developed and developing economies then it is observed that the selected countries gives crop and livestock insurance with and without subsidies from the governments. There are seven identified developed economies that do not give subsidies in their agriculture insurance namely Australia, Germany, Greece, Hungary, New Zealand, Sweden, and The Netherlands. However, many developed economies also give subsidies to their insurance program, notably the USA, Canada, Austria, and Switzerland among others. Let’s take a overview on agriculture insurance development of worldwide countries.

Historically, the agriculture insurance in Australia is considerably old as it was established in 1918 and is considered to be every well developed and very competitive. Named peril insurance products are common in Australia, with a number of companies providing insurance against hail, frost and fire risks. Significant expansion of the  program began only in the year 1960. In 1974–75  West farmers and Western Underwriters offered  an area yield guarantee scheme for Western  Australian growers. Growers could also nominate  cover for less than the 75 per cent of average  shire yield at a reduced premium. The scheme  suffered from poor take-up by farmers and had insufficient reliable individual farm data on which  to base premiums. As a result, the scheme suffered badly from adverse selection with  farmers who never made 75 per cent of the yield average keen to take on the scheme. While other  farmers who never fell below this level had no incentive to take up the scheme.

In 1999 to 2000, there were more insurance  products offered by Growers’ cooperative CBH and insurer AON. One of these is the crop failure  insurance that provided for a nominated value  per hectare that represented the cost of  replanting the crop the following  season. Another  is the sprouting downgrade insurance that  covered the downgrading of grains due to the sprouting of grains in the heads caused by wet weather prior to harvest. In this case, farmers were paid the difference in value between the intended grade of delivery and the grade it was eventually accepted into. In the early 2000 weather derivatives were introduced to  Australian farmers. This is based on rainfall and temperatures at weather stations across the  country. Another innovation in Australia’s  insurance is the YieldShield. This is a relatively new product offered by Primacy Underwriting  Agency starting in 2009 up to present. Yieldshield combines traditional named peril insurance for  hail and fire insurance with yield index insurance  that covers against insufficient or excessive  rainfall water stress for wheat and grain  sorghum. YieldShield’s water stress insurance  attempts to overcome the problem of a lack of farm-level yield data by utilizing crop simulation  models to estimate farm level yield. Another  insurance scheme which was based on the cost of  production cover was also introduced in April  2011.This is a trial mutual fund scheme for wheat  and barley growers in Western Australia. This  scheme allowed participating growers to cover their production costs if their yield fell below pre-specified levels. This was intended to cover  growers against natural events including drought,  frost, hail, flood and fire risks. Another notable  development in Australia’s agricultural insurance  is the CelsiusPro Australia which started  operations in 2012 until at present. The company  specializes in structuring and originating weather  derivatives. CelsiusPro’s weather derivatives are  based on a weather index derived from  measurements at several hundred official Bureau of Meteorology weather stations across Australia. A wide variety of certificates are available for agriculture. The major advantage of  the weather certificates is that claims do not  need to be assessed. Once the event occurs there  is an automatic pay out based on the data  received from Bureau of Meteorology  (BOM). The data is  independently sourced from the BOM who is the arbitrator in any dispute. Weather basis risk can  occur between stations which need to be noted  by the person looking at these types of strategies. CelsiusPro Australia suggested the government could play a role in the construction of more  weather stations to reduce basis risk. Some of the  private insurance companies that operate in Australia are Rural Affinity and Western Australian (WA) which has been working closely  with Australian Reliance in providing insurance products to farmers. Rural Affinity is owned  jointly by Corion (a fully owned subsidiary of the  Munich Reinsurance Company) and the executive  directors of the business. Rural Affinity is a  specialist agricultural insurance agency providing  products to the crop, plantation timber and  livestock industries in Australia and New Zealand.  The specific products are Livestock, Olive and Nut  Crop, Plantation Timber Australia and New Zealand, Cotton, Farm Pack, Viticulture, Small Farm and Fruiting Trees. The Australian Reliance is a Western Australian owned and operated Insurance Broker. Some of the services offered by Western Australian are a)  Multi-peril Crop Insurance (Cropsure)  –  this policy protects the  farmers from financial loss as a result of weather  events, disease and insect pest infestation. Unlike  other insurances that protects against loss of  income. Cropsure provides cover for operating costs including, but not limited to seed, fertilizer,  chemicals, field operations, fuel, freight inwards  and contract costs. b) A Complete Package –  the  package also includes: Traditional Crop Insurance including Fire and Hail, Farm Insurance, Motor  Vehicle, Home Building Contents, Credit  Insurance, Life  Insurance. Australia’s delivery channels are through brokers who are considered the most important in the delivery channel.  Producer associations, cooperatives and banks  are crucial in the linkages between the farmers  and the insurers. Crop and livestock insurance is  voluntary as there is no form of public support  for agricultural insurance in this country.  

The National Rural Advisory Council(NRAC) Australia in its assessment 2012 report puts an  emphasis the role of government to assist  Australian agricultural industries to become more  self-sufficient and better at managing weather  related impacts on production through providing  better and more standardized data.

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