Search Results (5)

There is growing concern that climate change poses a serious threat to the sustainability of the insurance business. Understanding whether climate warming is a cause for an increase in claims and losses, and how this cause–effect relationship will develop in the future, are two significant open questions. In this article, we answer both questions by particularizing the geographical area of Spain, and a precise risk, hailstorm in crop insurance in the line of business of wine grapes. We quantify climate change using the Spanish Actuarial Climate Index (SACI). We utilize a database containing all the claims resulting from hail risk in Spain from 1990 to 2022. With homogenized data, we consider as dependent variables the monthly number of claims, the monthly number of loss costs equal to one, and the monthly total losses. The independent variable is the monthly Spanish Actuarial Climate Index (SACI). We attempt to explain the former through the latter using regression and quantile regression models. Our main finding is that climate change, as measured by the SACI, explains these three dependent variables. We also provide an estimate of the increase in the monthly total losses’ Value at Risk, corresponding to a future increase in climate change measured in units of the SACI. Spanish crop insurance managers should carefully consider these conclusions in their decision-making process to ensure the sustainability of this line of business in the future. Full article

This article aims to evaluate the effect of insurance on production, technical efficiency, and input use of Italian specialised-quality grape growers. A panel instrumental variable stochastic frontier approach is applied over the years 2008–2017 using data from the Farm Accountancy Data Network. The results show the requirement to correct for the endogeneity that stems from insurance adoption. Insurance has an enhancing effect on production and efficiency and reduces the use of intermediate inputs. It suggests that insurance helps to diminish the risk-averse farmers’ suboptimal input use due to the presence of uncertainty. Crop insurance leads risk-averse farmers to behave as if they were risk neutral and employs the profit-maximising input vector. Therefore, by reducing the risks linked to the uncertainty of outcomes, crop insurance leads grape growers to go in the direction of profit maximisation. Full article

Late frost damage is one of the main meteorological disasters that affect the growth of wine grapes in spring, causing a decline in wine grapes quality and a reduction in yield in Northwest China. At present, remote sensing technology has been widely used in the field of crop meteorological disasters monitoring and loss assessments, but little research has been carried out on late frost damage in wine grapes. To monitor the impact of late frost in wine grapes accurately and quickly, in this research, we selected the Ningxia planting area as the study area. A practical framework of late frost damage on wine grapes by integrating visible, near-infrared, and thermal infrared satellite data is proposed. This framework includes: (1) Wine grape planting area extraction using Gaofen-1 (GF-1), Landsat-8, and Sentinel-2 based on optimal feature selection and Random Forest (RF) algorithm; (2) retrieval of the land surface temperature (LST) using Landsat-8 thermal infrared data; (3) data fusion using Landsat-8 LST and MODIS LST for a high spatiotemporal resolution of LST with the Enhanced Spatial and Temporal Adaptive Reflectance Fusion Model (ESTARFM); (4) the estimation of daily minimum air temperature (T_min) using downscaled LST and meteorological station data; (5) monitoring and evaluation of the degree of late frost damage in wine grapes in April 2020 by combining satellite-derived data and late frost indicators. The results show that the total area of wine grapes extracted in Ningxia was about 39,837 ha. The overall accuracy was 90.47%, the producer’s accuracy was 91.09%, and the user’s accuracy was 90.22%. The root mean square (RMSE) and the coefficient of determination (R²) of the T_min estimation model were 1.67 ℃ and 0.91, respectively. About 41.12% of the vineyards suffered severe late frost damage, and the total affected area was about 16,381 ha during April 20–25, 2020. This suggests the satellite data can accurately monitor late frost damage in wine grapes by mapping the wine grape area and estimating T_min. The results can help farmers to take remedial measures to reduce late frost damage in wine grapes, and provide an objective evaluation of late frost damage insurance claims for wine grapes. With the increasing weather extremes, this study has an important reference value for standardized global wine grape management and food security planning. Full article

This paper aims at understanding what affects farmers’ choices to buy insurance against biotic threats. Using a survey-based dataset with 1187 observations on Veneto wine grapes farms, we regress a probit model with endogenous variables with a maximum likelihood (ML) routine. The results corroborate the microeconomic theory according to which risk-adverse individuals are more propense to insure. In our framework, the farmers’ socioeconomic characteristics are treated as endogenous variables, which exist/are predetermined before the choice to insure (or not). This paper discusses the results in a policy perspective. Full article

Risk management policy in agriculture has become particularly prominent nowadays, considering the evolution of the Common Agricultural Policy (CAP) and climate change. Moreover, the Word Trade Organization places constraints on it. In this context, (1) the aim is to analyze the causes of the loss of effectiveness of the Italian insurance system, unable to deal with the specific coverage demand from agriculture. (2) The analysis is carried out through the economic evaluation of convenience in adhering to the instruments offered by the insurance market to winegrowers in the Controlled and Guaranteed Denomination of Origin (DOCG) area of Conegliano-Valdobbiadene. (3) The study highlights that the subsidized coverage alone is not the most adequate measure of agricultural policy. Adhering to preferential programs implies the drafting of a supplementary insurance policy to minimize the loss function. (4) The current insurance system impasse demonstrates that the producer hardly accepts to policies which do not convert into an immediate income benefit. The European risk management regulation confirms its limits in terms of usefulness and efficiency of the agrarian policy. (5) The prediction of probabilistic increase of severe-weather patterns makes the search for innovative risk assessment models more urgent, models which can combine the different needs of stakeholders: farmers, insurance companies, and society. Full article