The empirical demand for farm insurance in Ireland: a quantile regression approach
ISSN: 0002-1466
Article publication date: 6 July 2023
Issue publication date: 5 December 2023
Abstract
Purpose
The purpose of this paper is to analyse the association between farm/farmer characteristics and unsubsidized farm insurance premium expenditure in Ireland. The distribution of farm insurance expenditures is wide, and it is important to understand the extent to which individual factors influence demand for different levels of insurance premium.
Design/methodology/approach
The quantile regression approach and farm accountancy data from the Teagasc National Farm Survey are used to model the association between farm/farmer characteristics and farm insurance demand in Ireland.
Findings
Asset values (livestock, buildings and machinery) are positively associated with total insurance expenditure. Both forestry area and crop area are significantly associated with farm insurance expenditure with a stronger influence on the middle and upper part of the distribution. The interaction between farm income and farmer age is positively associated with insurance expenditure pointing to the importance of farm income protection.
Research limitations/implications
The research is mainly concerned with insuring against substantive risks, which are capable of threatening the asset base and continuation of the farm business. Future research can integrate questions in relation to farm safety and farmer health with research on the economic survival of the farm business.
Practical implications
Farmers in Ireland adopt unsubsidized farm insurance as a risk management tool. This situation is relevant to other EU member states including Belgium, Denmark, Germany and Sweden. The findings can be used to inform stakeholders and policymakers about the relative impact of different factors on insurance expenditure.
Originality/value
Previous research has typically focused on the linear relationship between farm/farmer characteristics and insurance demand without accounting for variability across the size distribution. This research is based on the quantile regression approach where the association between farm/farmer characteristics and farm insurance expenditure can be assessed at different points of the distribution.
Keywords
Acknowledgements
Corrigendum: It has come to the attention of the publisher that the article Loughrey, J. and Vidyaratne, H. (2023), “The empirical demand for farm insurance in Ireland: a quantile regression approach”, published in Agricultural Finance Review, Vol. ahead-of-print, No. ahead-of-print, https://doi.org/10.1108/AFR-04-2022-0051, should have specified that Herath Vidyaratne is a visiting lecturer at the University of Peradeniya. This information has now been added as an acknowledgement. Furthermore, an error which occurred during the submission process means ‘Faculty of Agriculture’ has now been changed to ‘Postgraduate Institute of Agriculture’. The authors sincerely apologise for any confusion caused.
The second author, Herath Vidyaratne, would like to acknowledge their position as a visiting lecturer at the Postgraduate Institute of Agriculture, University of Peradeniya.
Citation
Loughrey, J. and Vidyaratne, H. (2023), "The empirical demand for farm insurance in Ireland: a quantile regression approach", Agricultural Finance Review, Vol. 83 No. 4/5, pp. 572-596. https://doi.org/10.1108/AFR-04-2022-0051
Publisher
:Emerald Publishing Limited
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