Abstract:
Two models are commonly made use to explain the behavior of insurance industries,
namely: risk-pooling and the risk-absorbing models. Neither of the two models provides
an acceptable definition of insurance output in the economies experiencing high inflation
rate. To address the deficiencies of the present models, an alternative was proposed in the
current study as based on the theory of index number. To verify the reliability of the
suggested model, all the three models were tested using times series data from
Agricultural Insurance Fund in Iran. The first two models failed to provide a meaningful
indication of growth of Total Factor Productivity (TFP) in insurance Fund over the
period of study while, results of the productivity estimation in the context of the proposed
model show more consistence with reality and demonstrate an acceptable trend. Thus, the
proposed model seems to have the merit of being considered as an alternative one in
evaluating the productivity improvement in Agricultural Insurance Fund in Iran and as
well in other developing countries experiencing high inflation rate.
Keywords: Iran, Modified Agricultural Insurance Model, Productivity, Risk-absorbing
Model, Risk-assuming Model.
