The study aims to assess the commercial viability of a potential crop insurance
market in Bangladesh. In a large scale household survey, agricultural farm households were
asked for their preferences for a hypothetical crop insurance scheme using double bounded
(DB) contingent valuation (CV) method. Both revenue and production cost based
indemnity payment approaches were applied to assess the commercial viability of a crop
insurance program assuming a partner-agent (PA) model of insurance supply. Crop
insurance is found marginally commercially viable in riverine flood plain areas. The
expected indemnity payable consistently exceeds the expected insurance premium
receivable by the insurer for the households living in wetland basin and coastal floodplain.
We conclude that a uniform structure of crop insurance market does not exist in
Bangladesh. The nature of the disaster risks faced by the farm households and the socioeconomic
characteristics of the rural farm communities need to be taken into careful
consideration while designing such an insurance scheme.