Choice between Hail Insurance and Anti-Hail Nets of Apple Producers

42 Pages Posted: 18 Jul 2019

See all articles by Marco Rogna

Marco Rogna

Free University of Bolzano

Guenter Schamel

Free University of Bozen-Bolzano - Faculty of Economics and Management

Alex Weissensteiner

Free University of Bolzano Bozen

Date Written: July 18, 2019

Abstract

In this paper, we consider hail as a single source weather shock and we analyse the trade-off between anti-hail nets and insurance. We propose a simple theoretical model that is rooted into expected utility theory. After describing the basic model, we perform some comparative static analyses to identify the role of individual elements for farmers' decisions.We find that the benefit of anti-hail nets compared to insurance is an increasing function of the overall risk of hail damages, of the farmers' level of risk aversion and of the worth of the agricultural output.

Finally, we develop a simulation model using data related to apple production in South Tyrol, a Northern-Italian province with a relatively high risk of hail. The model generally confirms the results of the comparative static analysis and it shows that, in this region, anti-hail nets are often superior than insurance.

Keywords: Actuarial soundness, Agricultural insurance markets, Anti-hail nets, Hail, Expected utility

JEL Classification: Q12, Q18

Suggested Citation

Rogna, Marco and Schamel, Gunter and Weissensteiner, Alex, Choice between Hail Insurance and Anti-Hail Nets of Apple Producers (July 18, 2019). Available at SSRN: https://ssrn.com/abstract=3422191 or http://dx.doi.org/10.2139/ssrn.3422191

Marco Rogna (Contact Author)

Free University of Bolzano ( email )

Piazza Universita 1
Bolzano, 39100
Italy
3774080200 (Phone)
39100 (Fax)

Gunter Schamel

Free University of Bozen-Bolzano - Faculty of Economics and Management ( email )

Via Serniesi 1
I-39100 Bozen-Bolzano (BZ)
Italy
+39-0471-013-170 (Phone)

Alex Weissensteiner

Free University of Bolzano Bozen ( email )

Universitätsplatz 1
Bolzano, 39100
+39 0471 013496 (Phone)

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