Anything left for animal disease insurance? A choice experiment approach.

ABSTRACT

Animal disease insurance plays only a minor role in public activities related to animal diseases in animal production in Europe, and the current situation is likely to persist as long as producers place strong faith on public compensation schemes. In this study, we undertook a farm survey in Finland employing a choice experiment to study the willingness to pay for animal disease insurance products. We found that producers' willingness to pay for animal disease insurance is relatively low, even if consequential losses are covered. However, attributes of the insurance products which increased the likelihood of the producer wishing to purchase the product in a statistically significant manner were identified. The most important attribute was a low deductible. Using latent class analysis, four classes of producers were identified, those who were (1) not interested, (2) weakly interested or (3) strongly interested in insurance, and additionally, (4) a group who emphasised biosecurity measures but was not willing to purchase insurance. Those primarily interested in insurance were typically young, well-educated producers from large farms, and they already had a good level of biosecurity on their farms. However, the majority of the respondents preferred not to purchase insurance. The analysis suggests that commercial production animal disease insurance may need to be subsidised or otherwise made more attractive to producers, and even so, many producers might consider it unnecessary.