The Potential for Scale and Sustainability in Weather Index Insurance

Table 4: Index insurance evolution in Mexico (2003-2008)
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CASE STUDY 1
AGROASEMEX IN MEXICO
Annual crops 2003 2004 2005 2006 2007 2008
Policy terms (amounts in US$; area in ha)
Premium rate 10% 12% 15% 12% 13% 16%
Sum insured 32.8 68.2 51.8 56.1 54.3 70.2
Portfolio
Total number of policies sold 12 40 259 393 295 407
Total number of farmers covered 47 000 108 000 478 000 600 000 650 000 800 000
Total surface area 108 000 248 000 1 160 000 1 418 000 1 519 000 1 903 000
Weather stations 6 25 185 198 170 251
Total gross premiums 338 000 2 082 000 9 142 000 9 367 000 10 497 000 21 779 000
Total net premiums earned 338 700 1 630 000 5 602,000 7 026 000 4 380 000 13 104 000
Total sum insured 3 532 000 16 942 000 60 115 000 79 577 000 82 522 000 132 562 000
Reincurance
Reinsurance premiums paid
Total proportional reinsurance
- 451 000 3 540 000 2 341 000 6 118 000 8 676 000
(sum insured) - 4 210 000 23 280 000 19 886 000 47 857 000 52 805 000
Performance
Claims (payouts) - - 9 553 000 1 957 000 3 675 000 7 653 000
Loss ratio (claims/ gross premiums) 0% 0% 104% 21% 35% 35%
Agency costs 46 000 220 000 781 000 1 035 000 1 073 000 1 723 000
Source: AGROASEMEX.