Do GRIP and GRP provide an effective risk management tool given that neither provides coverage directly linked to individual losses?
Because GRIP and GRP are based on a county average yield, an individual grower may purchase a GRP/GRIP policy and receive no indemnity payment even though s/he individually may have suffered a significant loss. However, it is likewise true that this same grower may receive an indemnity payment even if s/he individually suffered no loss, but the county as a whole did. This is the nature of any group or index product, be it GRIP or GRP. As a result, group policies are most appropriate for growers whose yield or revenue expectations are closely correlated with that of the county.
