The Role of Insurance in Dealing with Disasters: The Case of Agricultural Insurance

One of the big challenges in the last years is the coverage of costs arising from catastrophic events. Due to climate change disasters are becoming more frequent and the classic tools of risk management and risk transfer are not enough. The increase in natural disasters, also due to climate change, requires a consideration on the means of transferring systemic risks characterized by low frequency and high harmfulness. In this case funding and prevention are two keywords. Until now the instrument, in addition to public compensation schemes, was the insurance contract together with reinsurance. In addition, thanks to new technologies, instruments beyond the classic insurance contract are offered on the market. This chapter will consider the catastrophic risk within the agricultural sector and discuss the management—also in terms of prevention—of catastrophe risk, its insurance coverage, index-based insurance, the use of cat-bonds. The chapter analyzes the state of the art in agricultural risk insurance according to the CAP Common Agricultural Policy in the European Union; it considers the possible causes of the insufficient diffusion of insurance coverage as a tool for the resilience of agricultural enterprises and proposes tools to reduce costs, simplify management and shift the attention of farmers to insurance.