Modelling the switch from hail insurance to antihail nets

Marco Rogna, Günter Schamel and Alex Weissensteiner

Australian Journal of Agricultural and Resource Economics, 2022, vol. 67, issue 01

Abstract: We analyse the impact of the antihail net promotion on the actuarial soundness of the hail insurance market. Specifically, we present a simple model showing that, in the presence of an imperfect insurance market, incentives for antihail nets could cause low-risk farmers to exit the insurance market more likely than high-risk ones. This induces a typical adverse selection problem. The theoretical model predictions are corroborated by an empirical investigation. Based on a fixed-effect conditional logit regression, we show that a higher per-hectare output value and a location strongly affected by hail both increase the chance that a plot is hedged through antihail nets.

Keywords: Agribusiness (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Modelling the switch from hail insurance to antihail nets (2023)
Working Paper: Modeling the Switch from Hail Insurance to Anti-Hail Nets (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aareaj:343036

DOI: 10.22004/ag.econ.343036

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