Agricultural Insurance in Latin America: Were Are We?

Topic :

This paper reviews the weaknesses of traditional crop insurance programs and highlights new developments, especially as they regard Latin America, that hold promise of making agricultural insurance more accessible, more efficient, and more sustainable.

The paper explains that traditional multiple peril agricultural insurance products, both in developed and developing countries have been plagued with incentive problems (moral hazard and adverse selection), high administrative costs, and political interference in price setting. However, the best case of innovation, in the developing world seems to be Mexico. The principal lesson learned from the experience of developed countries, is not to replicate their expensive systems, rather to use their extensive knowledge in designing and implementing insurance programs that avoid the classic obstacles to an efficient delivery of agricultural insurance.

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