Rainfall Index (RI) insurance
provides forage and hay producers
with group risk protection against
drought related losses. However,
insurance premiums and risk
protection are currently based on
pooled weather data series and do
not account for the impacts of
specific climate phases, specifically
the El Niño Southern Oscillation
(ENSO), on local rainfall
distribution. This analysis examines
differences in the expected payoffs
on the RI insurance under varying
coverage levels based on
probabilities of rainfall shortage
during specific climate events at four
Agricultural Experiment Stations in
Alabama. Policy makers and
producers are expected to benefit
from the results that show the
varying effects of climate on
expected payouts from this
insurance.
