Named peril index insurance has great potential to address unmet risk management needs for agricultural insurance in developing economies, potentially contributing to increased agricultural sustainability and improved food security.

However, the development and appraisal of index insurance business lines is not without challenges. Insurers must rigorously evaluate the quality of the products they offer and take care to ensure that distributors and policyholders understand the benefits and limits of the purchased coverage. Without these important steps to ensure responsible...