Agricultural Data and Insurance

Insurance products for low-income farmers or herders are usually built on indices that use agricultural or climatic data. Insurance can be one component of a comprehensive risk management strategy. Governments have important roles to play in establishing a framework for data collection, auditing, financing, and management. A strong audit function for the collected agricultural data is necessary to access international reinsurance markets. Insurable agricultural data can be useful for other purposes, and any such investments should be designed to maximize potential spillovers. Insurance for low-income farmers is usually built on indices, which need to be of high quality to provide meaningful protection. Governments have a key role in developing the data market infrastructure due to the fact that the collection of data can be a natural monopoly. Through providing a layer of reinsurance, governments can support agriculture insurance programs in initial years, while investments are being made in the data market infrastructure.  See Less -