Measuring Productivity of Agricultural Insurance in Iran: A Different Approach

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.