Using a regional climate model to develop index-based drought insurance for sovereign disaster risk transfer

Hohl, Roman; Jiang, Ze; Vu, Minh Tue; Vijayaraghavan, Srivatsan; Liong, Shie‐Yui

doi:10.1108/afr-02-2020-0020

Cited by 17 publications

(12 citation statements)

References 55 publications

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“…The loss expectation can be determined using historical burn rate method (HBR), which is the mean historical losses (Guerrero-Baena and Gómez-Limón, 2019; Hohl et al, 2020;Mortensen and Block, 2018;Shirsath et al, 2019).This method is widely applied in the insurance industry, however, requires sufficient data in order to be accurate. For smaller datasets considering uncertainty, expected values can be evaluated by fitting loss data to a probability density function (Aizaki et al, 2021;Bokusheva, 2018;Bucheli et al, 2021;Eze et al, 2020;Kath et al, 2019;Salgueiro, 2019;Sacchelli et al, 2018;Vroege et al, 2021;Ward et al, 2020).…”

Section: Financial Methods and Risk Pricingmentioning

confidence: 99%

“…Deterministic models were applied for income reduction impacts, especially for crop insurance. Additionally, some models were related only with one explanatory variable (one index) was the most common solution found in the in-depth analysis (Aizaki et al, 2021;Bokusheva, 2018;Bucheli et al, 2021;Hohl et al, 2020;Kath et al, 2019;Mortensen and Block, 2018;F et al, 2020;Vroege and Finger, 2020;Ward and Makhija, 2018). There is evidence that machine learning techniques improve loss modeling from different sources and present different time and spatial scales (Eze et al, 2020).…”

Section: Vulnerability Analysismentioning

confidence: 99%

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Review article: Design and Evaluation of Weather Index Insurance for Multi-Hazard Resilience and Food Insecurity

Benso

Gesualdo²,

Silva³

et al. 2022

Preprint

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Abstract. The urgency of accelerating disaster risk resilience also promotes preferred systematic reviews of the methods for design and evaluation of risk transfer tools. This paper aims to provide a state-of-art weather index insurance design, thereby including methods for natural hazards’ indices calculation, vulnerability assessment and risk pricing. We applied the Preferred Reporting Items for Systematic reviews and Meta-Analyses (PRISMA) using the Scopus database. First, 364 peer-reviewed articles from 2010 to present were screened for a bibliometric analysis and then, the 34 most cited articles from the past five years were systematically analyzed. Our results demonstrate that despite a great research effort on index insurance, the majority of them focused on food insecurity through agricultural and crop insurance. Also, climate change and basis risks were found highly relevant for weather index insurance, but weakly developed, suggesting challenges around food insecurity. Special focus was given to drought hazards, while other hazards such as temperature variation, excessive rainfall and wildfires were slightly covered. Emerging areas, namely agricultural, hydrological, and sustainable index insurance found promissory for insurance. Also, current state-of-the-art lacks methods for incorporating multi-hazard risk evaluation in vulnerability assessment and risk pricing. Most studies considered only single-hazard risk, and the multi-hazard risk studies assumed independence between hazards. Thus, we summarized the most common methods for calculating indices, estimating losses using indices, pricing risks, and evaluating insurance index policies. This review promotes a starting point in weather index insurance design towards a multi-hazard resilient society.

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Section: Financial Methods and Risk Pricingmentioning

confidence: 99%

Section: Vulnerability Analysismentioning

confidence: 99%

Review article: Design and Evaluation of Weather Index Insurance for Multi-Hazard Resilience and Food Insecurity

Benso

Gesualdo²,

Silva³

et al. 2022

Preprint

View full text Add to dashboard Cite

show abstract

“…It is ideally appropriate to weather threats that are wellcorrelated over a large area and when weather and agricultural output are closely related. The strongest associations, as per Hohl et al (2020), often entail a single crop, a distinct rainy season, and no irrigation. Until now, the majority of weather-based index insurance initiatives have concentrated on the risk of rainfall deficiency (drought).…”

Section: Principles Of Weather-based Index Insurancementioning

confidence: 99%

“…Weather extremes can have long-lasting impacts on smallholder farmers' livelihoods through at least two channels. First, they destroy assets and production, and to make up for the lost income households may resort to costly coping strategies (Hohl, 2020).…”

Section: Role Of Weather-based Index Insurance In Support Of Agricult...mentioning

confidence: 99%

Weather Based Index Insurance and Its Role in Agricultural Production

Kajwang¹

2022

IJA

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Purpose: Insurance not only is a shock absorber for farmers and other actors in the agricultural value chain, but it also enables access to credit and hence is an integral part of financial inclusion, and it enables/protects investments in better inputs and technologies which increase productivity. The different forms of insurance also reduce the government's budget exposure to agricultural risks. Crop insurance could incentivize farmers to increase their input use but indemnity-based crop insurance programs are plagued by market failures. The purpose of this research work was to examine weather-based index insurance and its role in agricultural production. This study highlights the key opportunities for weather-based index products and bring further clarity to how the use of weather-based index insurance can help to transform agriculture production. Methodology: Relevant book references and journal articles for the study were identified using Google Scholar. The inclusion criteria entailed papers that were not over five years old. Findings: This study found that the uptake of weather-based index insurance is positively and significantly associated with the use of chemical fertilizer and improved seeds, and also with crop yield. The study concludes that upscaling of weather-based index insurance programs may help to spur agricultural development in agricultural production. Recommendations: The study recommends that weather-based index insurance be linked to an existing development program or other market opportunities to provide added value to the client. As a stand-alone product, weather-based index insurance may be seen as an unnecessary cost and have little demand from farmers who face a variety of risks in addition to weather risks. The study also recommends partnership between weather-based index insurance programs and complementary agricultural development or risk management programs. NGOs in particular could play an important and independent role in the extension of information to farmers, possibly in conjunction with official extension services.

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“…In Indonesia, where some rice farming communities are vulnerable to sea-level rise, scholars are experimenting to identify rice cultivars with high yields under different salinity levels (Sembiring et al, 2020). Hohl et al (2021) used a regional climate model to develop index-based drought insurance products to help the Central Java government make drought-related insurance payments to rice farmers. Aprizal et al (2021) utilized land-use conditions and rain variability data to develop a flood inundation area model for the Way Sekampung sub-watershed in Lampung, Sumatra.…”

mentioning

confidence: 99%

Two decades of rice research in Indonesia and the Philippines: A systematic review and research agenda for the social sciences

Cuaton

Delina

2022

Humanit Soc Sci Commun

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While rice studies are abundant, they usually focus on macro-level rice production and yield data, genetic diversity, cultivar varieties, and agrotechnological innovations. Moreover, many of these studies are either region-wide or concentrated on countries in the Global North. Collecting, synthesizing, and analyzing the different themes and topic areas in rice research since the beginning of the 21st century, especially in the Global South, remain unaddressed areas. This study contributes to filling these research lacunae by systematically reviewing 2243 rice-related articles cumulatively written by more than 6000 authors and published in over 900 scientific journals. Using the PRISMA 2020 guidelines, this study screened and retrieved articles published from 2001 to 2021 on the various topics and questions surrounding rice research in Indonesia and the Philippines—two rice-producing and -consuming, as well as emerging economies in Southeast Asia. Using a combination of bibliometrics and quantitative content analysis, this paper discusses the productive, relevant, and influential rice scholars; key institutions, including affiliations, countries, and funders; important articles and journals; and knowledge hotspots in these two countries. It also discusses the contributions of the social sciences, highlights key gaps, and provides a research agenda across six interdisciplinary areas for future studies. This paper mainly argues that an interdisciplinary and comparative inquiry of potentially novel topic areas and research questions could deepen and widen scholarly interests beyond conventional natural science-informed rice research in Indonesia and the Philippines. Finally, this paper serves other researchers in their review of other crops in broader global agriculture.

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Using a regional climate model to develop index-based drought insurance for sovereign disaster risk transfer

Cited by 17 publications

References 55 publications

Review article: Design and Evaluation of Weather Index Insurance for Multi-Hazard Resilience and Food Insecurity

Review article: Design and Evaluation of Weather Index Insurance for Multi-Hazard Resilience and Food Insecurity

Weather Based Index Insurance and Its Role in Agricultural Production

Two decades of rice research in Indonesia and the Philippines: A systematic review and research agenda for the social sciences

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