Is there a commercially viable market for crop insurance in rural Bangladesh?

S. Akter, R. Brouwer, S. Chowdhury, S. Aziz

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Abstract

The study aims to assess the commercial viability of a potential crop insurance market in Bangladesh. In a large scale household survey, agricultural farm households were asked for their preferences for a hypothetical crop insurance scheme using double bounded (DB) contingent valuation (CV) method. Both revenue and production cost based indemnity payment approaches were applied to assess the commercial viability of a crop insurance program assuming a partner-agent (PA) model of insurance supply. Crop insurance is found marginally commercially viable in riverine flood plain areas. The expected indemnity payable consistently exceeds the expected insurance premium receivable by the insurer for the households living in wetland basin and coastal floodplain. We conclude that a uniform structure of crop insurance market does not exist in Bangladesh. The nature of the disaster risks faced by the farm households and the socio-economic characteristics of the rural farm communities need to be taken into careful consideration while designing such an insurance scheme. © 2008 Springer Science+Business Media B.V.
Original languageEnglish
Pages (from-to)215-229
JournalMitigation and Adaptation Strategies for Global Change
Volume14
Issue number3
DOIs
Publication statusPublished - 2009

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