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New Options for Managing Agricultural Weather Risk.

New Options for Managing Agricultural Weather Risk.

Authors :
Gardner, Lisa
Source :
CPCU eJournal. Aug2003, Vol. 56 Issue 8, p1-23. 23p. 1 Color Photograph, 4 Charts.
Publication Year :
2003

Abstract

Poor weather accounts for most agricultural production losses. Farmers have historically retained these losses or insured portions of them through crop insurance contracts. However, most crop contracts have significant moral hazard problems, making them susceptible to fraud. Fraud drives up insurance costs, harming producers, crop insurers, and reinsurers. A new set of financial tools--weather derivatives--provides another way to handle weather-related production losses. Weather derivatives offer a viable way to handle weather-related agricultural production losses. Reinsurers and crop insurance companies may use them to diversify risk portfolios; crop insurers can also use them to hedge risks. Producers may use them to reduce retentions, diversify income, and reduce earnings volatility. [ABSTRACT FROM AUTHOR]

Details

Language :
English
Volume :
56
Issue :
8
Database :
Academic Search Index
Journal :
CPCU eJournal
Publication Type :
Periodical
Accession number :
11697233