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THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.71, # 2, 2014, pp. 31-41

of support range from national reinsurance companies to agreements under which governments act as

excess-of-loss reinsurers (in such cases, the government charges no reinsurance premium) [8].

Governments can also provide support with legislation (51 percent of crop programs and 33

percent of livestock programs reviewed) and research, development, and training (44 percent of crop

programs and 33 percent of livestock programs reviewed). Only 11 percent of the surveyed countries

have developed special programs for small and marginal farmers, usually in the form of additional

Overview 11 premium subsidies. In some countries, such as Chile, rural banks and insurance

companies have developed such programs. In Mexico the public reinsurance company supports small

farmers’ self-insurance groups. The total public cost of agricultural insurance programs is estimated

at 68 percent of the 2007 global premium volume, of which upfront premium subsidies represent 44

percent. On the basis of the World Bank survey in 65 countries, the overall government cost of

upfront premium subsidies is estimated at 44 percent of original gross premiums [2].

With the inclusion of administrative and operating subsidies and claim subsidies, the total

cost to governments of agricultural insurance provision may be as high as 68 percent of original

gross premiums. The public cost of agricultural insurance subsidies represents 50–300 percent of

the premiums paid by farmers in the majority of the countries surveyed. Public support to

agricultural insurance in many high-income countries (including Italy, Spain, and the United

States) represents more than twice the premium paid by farmers. In contrast, in most of the middle-

and low-income countries surveyed, public support to agricultural insurance represents 50–150

percent of the premium paid by farmers. Subsidies are not always a precondition for high

penetration. High levels of agricultural insurance uptake can be found not only for programs that

carry high premium subsidy levels [9].

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