Farmers’ Awareness and Approach to Agricultural Insurance as a Risk Mitigation Strategy

Abstract

This study aims to explore the development of agriculture insurance from farmers’ perspective in a developing country such as Albania and to identify the reasons why farmers choose to be insured or not. Moreover, the paper aims to evaluate the willingness of farmers to choose agricultural insurance as the best method to reduce agricultural risks based on the offer of the insurance market in the agricultural sector. For this purpose, the study employs primary data gathered from 452 questionnaires distributed in four regions with the highest agriculture contribution and the highest number of farmers in Albania (Tirana, Dibër, Korçë and Fier). The results indicate that Albanian farmers, despite being aware of the various risks involved in agricultural production, opt not to purchase insurance policies and instead choose to self-insure. Analysis shows that this choice is influenced by factors such as lack of information, price, and trust in insurance providers. Moreover, the study points out that farmers are willing to pay a low premium that does not match the price set by insurance companies for this service.