Nature of Insurance Insurance is a means to minimize the seriousness of a risk to an individual. A risk is the exposure of a person er a commodity to loss or injury. Any person can encounter the vari- ous risks to which he and his properties are exposed. To a farmer, the risks are more numerous, such as flocd. typhoon, lightning, pests, fire, theft, fall in price, and deterio ration in quality of stored products Nevertheless, some of these risks can be reduced by advanced planning. For instance, the destruction of crops by insects can be foreseen. Therefore, to prevent or minimize losses, appropriate insecticide is applied on the crop. But there are kinds of risks which occur very rap- idly without any warning. And in some cases even if there are warnings, farmera are helpless to prevent or control the damage. The risks which are beyond the control of farmers greatly affect their economic and social conditions. It is not only their incomes which are reduced but also they cannot pay their debts. As a result, they find it difficult to finance their farm activities with their extremely low inceme. The government has realized the serious implications of this situation on agricultural production and on the quality of life of the farmers and their families. Thus, it has introduced the program of crop insur- ance for the benefit of the small farmera and for the econoray as a whole.
Nature of Insurance Insurance is a means to minimize the seriousness of a risk to an individual. A risk is the exposure of a person er a commodity to loss or injury. Any person can encounter the vari- ous risks to which he and his properties are exposed. To a farmer, the risks are more numerous, such as flocd. typhoon, lightning, pests, fire, theft, fall in price, and deterio ration in quality of stored products Nevertheless, some of these risks can be reduced by advanced planning. For instance, the destruction of crops by insects can be foreseen. Therefore, to prevent or minimize losses, appropriate insecticide is applied on the crop. But there are kinds of risks which occur very rap- idly without any warning. And in some cases even if there are warnings, farmera are helpless to prevent or control the damage. The risks which are beyond the control of farmers greatly affect their economic and social conditions. It is not only their incomes which are reduced but also they cannot pay their debts. As a result, they find it difficult to finance their farm activities with their extremely low inceme. The government has realized the serious implications of this situation on agricultural production and on the quality of life of the farmers and their families. Thus, it has introduced the program of crop insur- ance for the benefit of the small farmera and for the econoray as a whole.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter16: Information, Risk, And Insurance
Section: Chapter Questions
Problem 11RQ: What is an actuarially fair insurance policy?
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