ABSTRACT
Risk remains a serious and growing problem for farmers and rural communities in the developing world, and many governments have long felt the need to intervene through some form of subsidized insurance or disaster assistance program. Of particular note has been a shift away from publicly supported, multiple-peril crop insurance programs to index-based insurance (IBI), and to supplying insurance through various types of public–private partnership arrangements rather than through state-owned institutions. The use of IBI has removed many of the disincentive problems and high costs that plagued agricultural insurance, while the use of public–private partnerships has helped garner some of the efficiencies of the private sector with targeted public sector financing. Governments are rarely constrained by such narrow economic arguments, and often choose to heavily subsidize agricultural insurance for broader political and social purposes. Key among redesigning agricultural insurance reforms is the growing use of IBI products, which now cover about one-third of all farmers in the developing world.
