Evaluating the Efficiency of Crop Index Insurance Products

Index crop insurance products can eliminate the asymmetric information problem inherent in farm-level multiple peril crop insurance. Purchasers of index insurance products are, however, exposed to basis risk. This study evaluates the efficiency of various index insurance products to reduce farm yield loss for representative corn farms in southern Georgia. Index insurance products considered are based on county yields, cooling degree days, and predicted yields from a crop simulation model.