Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/311029 
Year of Publication: 
2023
Citation: 
[Journal:] The Geneva Risk and Insurance Review [ISSN:] 1554-9658 [Volume:] 48 [Issue:] 2 [Publisher:] Palgrave Macmillan [Place:] London [Year:] 2023 [Pages:] 230-259
Publisher: 
Palgrave Macmillan, London
Abstract: 
This paper evaluates the potential value of a weather index insurance for the agriculture sector in an high income country (Germany). In our theoretical analysis we model an index insurance, a loss-based insurance market as well as a combination of both kinds of insurance and compare the resulting expected utility of a risk averse crop farmer. To find a suitable index, we conduct a panel estimation and evaluate the link between different weather variables and losses of crop farmers in Germany. Following our estimation, mean temperatures in summer have the highest potential for an valuable index insurance. Finally, we simulate the theoretical model using the results from the estimation and using different thresholds for the definition of a NatCat. According to this simulation, index-insurance is more attractive for the lower and more frequently occurring losses and loss-based insurance is more attractive for rare high losses. A combination of both kinds of insurance could be optimal for intermediate cases.
Subjects: 
Weather extremes
Agriculture yields
Insurance
JEL: 
G22
Q14
Q54
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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