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| | Crop Insurance | | | | |
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| Crop Insurance |
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Crop insurance is normally purchased by farmers to protect themselves
against crop failures due to natural disasters, such as floods, hail,
and drought. Crop insurance may also be subsidized by the government.
However, in recent years the possibility of addressing agricultural
risk factors by issuing derivatives on weather elements has been explored.
The new approach turns away from the traditional form of insurance that,
in practice, has proved to have serious limitations and the proposed approach
is an insurance based on weather based indices such as an insurance based
on indices of precipitation defined during the critical growth period of
annual crops.
The implementation of this insurance by the government covering natural
disasters (i.e. drought and flood) will allow immediate disposal of funds –
through indemnification – for emergency actions and mitigation.
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2006 - A
Weather Yield Index for maize Crop Insurance in Malawi