The market insurance price or premium is calculated as the fair insurance premium plus a loading factor, which can be interpreted as the transaction cost in the insurance market.1 On the other hand, demand for crop yield insurance indicates the proportion of insured land that combines all the available crops. According to the demand curve in Figure 2.1, the farmer does not participate in crop insurance markets if the transaction cost of insurance is more than 8.1% of the fair insurance premium in Australia and 4.4 % in the UK. While the representative farm in Australia fully insures yield risk at 1.5% of insurance cost, the representative farm in the UK does not fully insure yield risk even when the insurance cost is equivalent to a fair insurance premium. This result is robust with respect to different levels of risk aversion. Two factors contribute to explaining this result.