Identification of the key determinants of subsidized crop and livestock insurance purchase Cover Image

Identyfikacja kluczowych determinant zakupu dotowanego ubezpieczenia upraw rolnych i zwierząt gospodarskich
Identification of the key determinants of subsidized crop and livestock insurance purchase

Author(s): Grzegorz Strupczewski
Subject(s): Economy
Published by: Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu
Keywords: insurance; crop insurance; demand for insurance; logistic regression

Summary/Abstract: The importance of insurance in risk management strategy of farms has been one of the most important issues taken by the theorists and practitioners of insurance for many years. Insufficient demand for this type of protection, in spite of obvious dangers (especially natural) and continuous improvement of various systems of public support for market-based mechanism (eg. in the form of government subsidies for premiums and indemnities, publicprivate partnership), raises the question about factors that influence the decision to purchase crop insurance for farmers. The aim of the paper is to identify variables significantly affecting the purchase of crop and livestock insurance in Poland and to build an econometric decisionmaking model determining the probability of the insurance purchase. The analysis based on a logistic regression model has led to the conclusion that the decision to purchase crop insurance is conditioned by two factors: farm area and willingness to pay (WTP) the insurance premium. The direction of impact of the two variables is positive. The odds to purchase the insurance policy is 2.07 times higher if a farm has a bigger area of agricultural land. The higher the insurance premium which a farmer is willing to pay, the more likely is the purchase of crop insurance. The one percent increase in declared WTP is associated with a 1.73 times greater chance to purchase crop insurance.

  • Issue Year: 2016
  • Issue No: 415
  • Page Range: 225-240
  • Page Count: 16
  • Language: Polish