Testing Agricultural Index Insurance for Minimum Quality
Feed the Future Innovation Lab for Markets, Risk and Resilience
An agricultural index insurance contract’s quality is hidden. On its surface, farmers considering a policy or national governments seeking to subsidize coverage have no way to know whether a product has the potential to provide real value.
An agricultural index insurance contract’s quality is hidden. On its surface, farmers considering a policy or national governments seeking to subsidize coverage have no way to know whether a product has the potential to provide real value. The Minimum Quality Standard (MQS) for agricultural index insurance is a simple, objective metric using standard economic and statistical tools. If an index insurance contract at a minimum has the potential to provide more value than no insurance at all or an equivalent cash transfer, it passes MQS.
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