We　propose　an　insurance　contract　under　which　the　supplier　shares　the　risk　of　overstock　and　understock　with　the　retailer,　improving　the　efficiency　of　the　supply　chain　with　a　newsvendor-type　product.　We　first　show　that　the　insurance　contract　could　coordinate　the　supply　chain,　and　obtain　bargaining　solution　in　the　supply　chain　model.　Then　we　investigate　the　effects　of　agents＇　risk　aversion　on　the　supply　chain　model　and　acquire　the　Pareto-optimal　solution　through　the　mean-variance　approach.　After　that,　we　compare　the　insurance　contract　with　the　revenue　sharing　contract,　focusing　particularly　on　their　differences.　Finally,　extensive　numerical　studies　are　conducted,　and　managerial　implications　are　proposed.　(C)　2010　Elsevier　B.V.　All　rights　reserved.