The need for agricultural competitiveness in an integrated commodity markets coupled with climate change adaptation, have allowed the demand for crop insurance as a risk- management measure to remain strong. However, inherent market/structural weaknesses, have constrained traditional crop insurance products to deliver their expected benefits.
Under these circumstances, the government has subsidized the bulk of premium costs to agricultural producers. Even with substantial public support, there has been little evidence to show that these interventions have resulted to better outcomes in terms of wider penetration rates among farmers and higher financial returns to the insurers.
The challenge therefore is how to overcome these operational impediments and develop cost-effective agricultural insurance schemes. Likewise, there is a need to stress that crop insurance is not an all-out solution for risk management and climate adaptation. It has to be implemented with other risk management measures or it would likely fail to reduce production risks and to advance adaptation.