Indemnity-based crop insurance products The main feature of indemnity-based crop insurance products is that payouts are based on the actual loss incurred by the policyholder. Traditional indemnity-based insurance products include (a) damage-based indemnity policies, which include, in their simplest form, single-peril hail insurance and named-peril crop insurance, and (b) loss-ofyield indemnity policies, including MPCI cover for a yield shortfall. Yield-based MPCI is the most common type of crop insurance marketed in the LAC region. Yield-based MPCI products accounted for 39.4 percent of total agricultural insurance premiums written in the LAC region in 2009. With the exception of Nicaragua and the Windward Islands, yield-based MPCI products are offered in all countries in the region where agricultural insurance is available. Brazil and Mexico are among the countries where MPCI has reached the most advanced levels of development. The area insured under MPCI is approximately 6.4 million and 1.9 million hectares for Brazil and Mexico, respectively. Other countries with relatively high development of MPCI are Chile, Rep煤blica Bolivariana de Venezuela, Panama, and Paraguay. MPCI has yet to be adopted widely in many Central American countries. In Argentina and Uruguay yield-based MPCI is not popular among farmers, and this insurance product is purchased almost exclusively by big agribusiness firms, usually on an aggregate basis for all the crops and locations in which they have interests.
Aggregate yield-shortfall MPCI is specifically designed to be tailored at the meso level or macro level. An interesting variation of yield-based MPCI policies that is quite popular in some LAC countries is the aggregate yield-shortfall MPCI policy known in Spanish as seguro catastr贸fico con ajuste de rendimientos. Aggregate yield-shortfall MPCI policies are purchased by state or local governments to get funding to assist farmers, in case one or more events severely affect crop production in the region where they occur. Aggregate yield-shortfall MPCI policies share a feature with area-yield index-based insurance in that the insured unit is a geographic area rather than the individual farm. However, aggregate yield-shortfall MPCI policies are not considered index insurance because they involve in-field loss adjustment (on a sampling basis) in order to determine the eventual yield shortfalls. Aggregate yield-shortfall MPCI policies are popular in Mexico, where approximately 8 million hectares of crops are insured under this modality. In Peru almost 100 percent of the total insured area in the country (approximately 500,000 hectares) is insured under aggregate yield-shortfall MPCI policies. Colombia has recently implemented an aggregate yield-shortfall MPCI scheme to protect banana production in the Department of Quindio.
Global portfolio MPCI is designed specifically for well-diversified large-size agribusiness firms. Global portfolio MPCI has the same principles and operation as the traditional yield-based MPCI coverage. However, global MPCI coverage has several particular