An archetype for insurance thresholds for extreme natural events in the agricultural sector

Avigail Newman Cohen*, Itay Fischhendler

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

4 Scopus citations

Abstract

The use of insurance against disasters triggered by natural hazards has become a common mechanism in the agricultural sector. Typical insurance policies, including those in the agricultural sector, specify an event or threshold beyond which insured payments are triggered. However, there is an absence of studies situating agricultural insurance against natural disasters in the wider insurance framework or depicting the range and evolution of thresholds for extreme events in the agricultural sector. As a result, there is no conceptual framework for understanding how a threshold is selected in real life situations. This study comes to address this gap by developing an archetype for threshold selection under conditions of climate mitigation and adaptation uncertainty. To this end, the study first unpacks the concept of insurance thresholds and identifies its evolution over time as well as its main building blocks: insurance realm, primary thresholds, and risk indicators. It then assembles these building blocks into three generic trajectories (climate exposure, location exposure, and sensitivity), each driven by different external and internal variables. Finally, it lays the foundation for treating the topic of insurance threshold as a research agenda.

Original languageAmerican English
Article number100434
JournalClimate Risk Management
Volume36
DOIs
StatePublished - Jan 2022

Bibliographical note

Publisher Copyright:
© 2022 The Authors

Keywords

  • Crop insurance
  • Disaster definition
  • Insurance mechanism
  • Insurance thresholds
  • Natural hazards insurance

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