Page 35 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.71, # 2, 2014, pp. 31-41

as cumulative rainfall or aggregate crop yields in a geographical area)—is available in 20 percent

of high income and more than 40 percent of middle-income countries, usually under weather-

based crop insurance programs. The aggregate premium volume for index insurance remains

very low, however, as markets are not mature. Except in India and Mexico, most of the weather-

based crop insurance programs are still under pilot implementation, with only few farmers

insured. Many index initiatives in middle- and low-income countries have been supported by the

donor community and the international reinsurance market. Livestock insurance is available in

85 percent of the surveyed countries. It is offered, usually in the form of individual animal

accident and mortality cover, in a very high proportion of the surveyed countries. Many

programs are very small, however, with demand and penetration rates generally low.

Consequently, premium volume is much lower for livestock insurance than for crop insurance.

Almost 80 percent of high-income and 63 percent of low- and middle-income countries surveyed

offer livestock insurance. Insurance against epidemic diseases is offered mainly in high-income

countries. Countries with large and specialized livestock insurance markets include China,

Germany, Mexico, and Spain. Mongolia has been piloting index-based livestock insurance since

2006. Delivery channels are highly dependent on the development status of private insurance

markets. In developed insurance markets in high income and upper-middle-income countries,

insurance is traditionally marketed through insurance agents employed by insurance companies

or insurance brokers. In low-income countries, where the insurance market is underdeveloped,

agricultural insurance is provided mainly through cooperatives and farmers’ groups. The

provision of agricultural insurance through rural banking networks, including microfinance

institutions, is still very limited, although several initiatives are under preparation in Africa and

Asia. Almost 80 percent of agricultural insurance programs are offered on a voluntary basis. In

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