Factors Affecting Crop Insurance Holding Intention of Farmers in Nepal

Abstract

Natural disasters such as droughts, floods, hurricanes, landslides, erratic rainfall, earthquakes, and many other climate change-related problems often affect agricultural production and farm income in Nepal. Agriculture's vulnerability to such disasters is exacerbated by epidemics and man-made disasters such as arson, spurious seed sales, fertilizers and pesticides, market crashes, etc. Such factors have exposed the higher risk to agri-business. Crop insurance is one of the main means and methods for reducing agricultural production risks. While crop insurance is one of the main risk management methods, even larger segments of farmers are outside the insurance program of the government. This may be due to many reasons such as awareness level, risk attitude, accessibility to insurance service of farmers, prevailing production risk, premium level, expected indemnity value, claim settlement process and many others. Several studies show that these factors have direct relation with the farmers' intention of holding insurance scheme. This study aims at analysing the effect of factors related to crop insurance holding intention of farmers. Data was collected from a sample of 109 farmers. Results indicated relation of risk attitude, expected indemnity & claim settlement, accessibility to insurance, awareness level. Insurance awareness has the highest relationship with the crop insurance holding intention. Similarly, insurance awareness, expected indemnity and claim settlement and risk attitude showed positive significant impact with crop insurance holding intention. Production risk and premium level and accessibility of insurance had no influence. This result implies that if awareness level of insurance is increased on farmers, their motivation toward insurance scheme can be increased. Therefore, it can be concluded that insurance program will not be successful until and unless it is supported with awareness building program and making the implementation process simpler and easy.