Agricultural insurance for smallholder farmers contributes to many policy objectives. It helps smallholder farmers gain access to finance, increase productivity and income, thereby reducing poverty and vulnerability. It also helps enhance food security and government resilience in response to natural hazards and climate change, which further causes an increase of hazards such as tropical cyclones, drought, floods and bushfires. This is especially important for countries where agriculture is a key contributor to the economy, and where crops and livestock are highly exposed to natural disasters. Agricultural insurance enables better management of government finances by reducing expenditure on post-disaster relief, reducing volatility and sharing the financial burden with the industry.
