Parametric Insurance as Innovative Development Factor of the Agricultural Sector of Economy

Olena ProkopchukIhor ProkopchukGrzegorz MentelYuriy Bilan

DOI 10.7160/aol.2020.120307
No 3/2020, September
pp. 69-86

Prokopchuk, O., Prokopchuk, I., Mentel, G. and Bilan, Y. (2020) “Parametric Insurance as Innovative Development Factor of the Agricultural Sector of Economy", AGRIS on-line Papers in Economics and Informatics, Vol. 12, No. 3, pp. 69-86. ISSN 1804-1930. DOI 10.7160/aol.2020.120307.

Abstract

In the article a parallel between the classical and parametric scheme of agricultural risk insurance is conducted. The application aspects of parametric (index) schemes of insurance with emphasis on the use of weather index insurance products are examined, their advantages and disadvantages are considered. This research examined the applicability along with simple weather index insurance products combined, that can consider and put together a few parameters simultaneously and thus neutralize the impact of the whole weather risks at regional level. The authors demonstrated the feasibility of using the proposed combination of weather index (Ci) – a special indicator which characterize the impact of weather risk combitation intensity, measured by certain parameters (heat, cold → temperature; air humidification → relative humidity; drought → precipitation) on the grain maize yield in definite growth stages (flowering and grain filling). On the basis of research, the detail mechanism proposed by the authors of the combined weather index (Ci) in general, and on the example of concreate calculations, is performed in particular.

Keywords

Insurance, agricultural insurance, classical insurance scheme, parametric insurance scheme, insurance products, index, weather risk, weather conditions.

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