Participation dynamics in multiple-peril agricultural insurance: insights from India

Abstract

Multiple-peril agricultural insurance, although operational in many developing countries, evokes mixed responses among smallholder farmers. In this context, we analyse the farmer-specific characteristics that are most amenable for participation in India's revamped federal agricultural insurance program. A sequential logit model is applied to a primary survey-based dataset of 1332 farmers in order to examine the factors influencing various transitions across categories. Age, female as gender and previous insurance experiences turn out to positively influence participation. Engagement in non-farm occupation and higher access to irrigation reduce the likelihood of participation. In the event that the insurance product is delinked from state supported farm credit, the more educated farmers want to move out while female farmers prefer to stay. These results offer important policy insights amidst the persistent efforts to establish a self-sustaining market for agricultural insurance in developing countries.