In light of this renewed interest in and demand for agricultural insurance, this paper first reviews how agricultural insurance products have evolved and then examines innovative products which have recently been developed and how they have been applied in practice. One major conclusion is that encouraging insurance mechanisms is preferable to ad hoc disaster aid. Disaster aid has counterproductive effects since it encourages farmers to neglect their responsibility for managing their own business risk. It tends to encourage production in marginal situations by indiscriminately covering crop losses, e.g. in fragile, arid countryside or flood-prone wetlands. In contrast, crop insurance actively reduces risk exposure by promoting public and private risk management.