QUANTIFYING THE ASSOCIATION OF RAINFALL AND HEAT STRESS WITH INDEX-BASED CROP INSURANCE CLAIMS

B. Mazviona (), S. Sølvsten () and R. I. Palwishah ()

Strategic decisions and risk management, 2026

Abstract: Index-based crop insurance is one of several mechanisms available to crop producers for managing weather-related risks. Despite extensive efforts to quantify and assess these risks, the effects of individual weather variables on crop insurance losses remain insufficiently understood. This study examines the association of rainfall and temperature with claims under index-based crop insurance. We use a unique dataset covering 2005–2011 from CADENA, a discontinued government program for catastrophic agricultural risks in Mexico. Robust panel-data specifications are used to model the relationship between index-based crop insurance claims and two weather variables—cumulative rainfall and cumulative stress degree days—at critical stages from sowing through harvesting. The results show that cumulative rainfall may be positively or negatively associated with claims, depending on the crop-development stage. Cumulative stress degree days are statistically significant during the harvesting phase and are associated with lower claims. These findings can help insurers define simple, readily interpretable trigger thresholds and manage claims under index-based crop insurance products based on rainfall and temperature indices.

Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:abw:journl:y:2026:id:1322

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