Review of evidence on the design and impact of agricultural insurance for smallholder farmers in low- and middle-income countries
Agricultural insurance has long been promoted as a tool to help smallholder farmers manage production and market risks, yet affordable, well-functioning coverage has proven difficult to deliver at scale. This paper reviews peer-reviewed evidence on the design, implementation, and impacts of agricultural insurance in low- and middle-income countries, with a focus on innovations that have emerged since early indemnity-based multi-peril crop insurance programs gave way to index-based and hybrid approaches. It synthesizes findings on ex ante and ex post impacts, on design features that shape cost, basis risk, and payment timing, and on distribution channels and inclusion of women and low-income households. The review finds that insurance can meaningfully protect household consumption and assets after shocks and encourage productive investment beforehand, but that these benefits depend heavily on accurate loss assessment, adequate coverage size, and trust built through distribution partners. The paper concludes with operational recommendations for policymakers and practitioners on product design, subsidies, and distribution, and identifies priority evidence gaps, including the optimal design of subsidies and insurance's potential to address non-weather-related risks.
Authors
Hill, Ruth Vargas; McNamara, Brian; Kramer, Berber; Ceballos, Francisco
Citation
Hill, Ruth; McNamara, Brian; Kramer, Berber; and Ceballos, Francisco. 2026. Review of evidence on the design and impact of agricultural insurance for smallholder farmers in low- and middle-income countries. IFPRI Discussion Paper 2447. Washington, DC: International Food Policy Research Institute. https://hdl.handle.net/10568/185790
Keywords
Africa; Asia; Southern Asia; Insurance; Agricultural Insurance; Smallholders; Farmers; Risk Management; Climate; Risk; Developing Countries; Climate Resilience
Access/Licence
Open Access
