Willingness to Pay of Rice Farmers in Lao PDR on Agriculture Insurance
Keywords:
Agriculture Insurance, Willingness to Pay, Insurance Premium, and IndemnityAbstract
Agricultural production is under the constant threat of disasters such as droughts, floods, and storms and from diseases and pests. The increasing incidence of crop-damaging events is likely to drive a demand for insurance coverage. The insurance industry is mindful of increasing exposure and is exploring new financial instruments to assist in managing this exposure. Agricultural insurance has been repeatedly discussed in Lao PDR but has only been converted into a premium subsidy scheme. This study offers some ‘first options’ for agricultural insurance and focuses on rice farmers as examples. The objectives of this research were to evaluate the level of willingness of farmers to pay for agricultural insurance, to analyse insurance premiums and indemnity and to assess the determinants of farmers’ decisions to buy agricultural insurance. Data was collected via stakeholder interviews, field surveys, and scenario planning. The results of the ‘Willingness to Pay’ surveys suggest that rice farmers would pay premiums 17% of indemnity. This result is consistent with previous studies and the insurance policies of neighbouring countries. The results also showed that farmers impacted by disasters are more willing to pay than those who have not been affected. Bank conditions affect rice farmers’ decisions to buy insurance.
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