The effects of weather risks on micro-regional agricultural insurance premiums in Hungary

Gábor Kemeny, Tibor Varga, József Fogarasi, Anna Nemes
2013 Studies in Agricultural Economics  
This paper examines the effects of territorial differentiation of damage to wheat, maize, barley, sunfl ower and rapeseed production caused by drought and heavy rain. Our study evaluated the differences between LAU1 micro-regions in Hungary in the effects of the weather on agricultural production and found that there are extremely high differences in the probabilities of damage occurring. Therefore the design of agricultural insurance products should be based on different absolute deductibles
more » ... olute deductibles and different insurance premiums for micro-regions. Furthermore, we found that within a micro-region individual producers face a very high diversity of risks which implies that in the long term only a bonus-malus system developed for individual agricultural producers can mitigate different risks, and that this can be the basis of a well performing risk management system that is suitable for a wide risk community.
doi:10.7896/j.1305 fatcat:ho2jvdotfffrnpfkhz526klkja