How agricultural insurance can improve food security – and why regulation matters

These notes make the case for agricultural insurance in the context of food security, explaining some of the challenges and options in regulating innovative index-based insurance approaches. Unfavorable weather events cause heavy losses to farmers every year and contribute to rural poverty. However, key barriers still need to be addressed and most products are still in pilot stage. An area that has not received much attention yet is the essential role that regulation and supervision plays in supporting and enabling wider access to index-based agricultural insurance products. The paper provides an overview of the benefits of agricultural insurance, explains why regulation matters and highlights some of the challenges faced by supervisors when seeking to regulate index-based agricultural insurance.

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