Agricultural insurance, although one of the most often quoted tools for risk
management, can only play a limited role in managing the risks related with
farming. The applicability of insurance in any given situation is based on
consideration of whether it is a cost-effective means of addressing a given risk.
In practice, agricultural insurance is almost invariably a adjunct to a whole set
of risk management measures of which adequate farm management practices
constitute an important element. The acid test of developing and operating an
insurance programme to complement other risk management measures depends
on the cost/benefit ratio - to the farmer and to the potential insurance providers.