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Client satisfaction and product understanding as drivers for insurance renewal – A case study in Mali

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  • Kirchner, Ella
  • Musshoff, Oliver

Abstract

Agricultural microinsurance are a promising risk management tool for smallholder farmers. However, adoption rates remain low and only a small share of farmers renews their policy after the first period. Yet, it is essential for the sustainability of an insurance scheme to retain a solid customer base. To date, it is largely unknown what drives the decision to renew an agricultural microinsurance policy. We address this question by performing mean comparisons and logistic regressions based on collected primary data on 479 smallholder farmers in Mali who purchased a weather index-based insurance in 2020. Results show low levels of understanding of the product among all clients, but especially among those who did not renew. Similarly, the level of satisfaction was considerably higher among clients who renewed. Both factors were confirmed as drivers for renewal. Yet, in line with previous findings, the receipt of a payout had the strongest effect on the renewal decision whereas harvest loss in the most recent season was not having an impact. We conclude that additional efforts to foster client satisfaction as well as to promote understanding of agricultural insurance among smallholder farmers are highly recommended.

Suggested Citation

  • Kirchner, Ella & Musshoff, Oliver, 2022. "Client satisfaction and product understanding as drivers for insurance renewal – A case study in Mali," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 321216, Agricultural Economics Society - AES.
    • Handle: RePEc:ags:aesc22:321216
    DOI: 10.22004/ag.econ.321216
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    References listed on IDEAS

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    1. Platteau, Jean-Philippe & Ugarte Ontiveros, Darwin, 2021. "Cognitive bias in insurance: Evidence from a health scheme in India," World Development, Elsevier, vol. 144(C).
    2. Daniel Stein, 2018. "Dynamics of Demand for Rainfall Index Insurance: Evidence from a Commercial Product in India," The World Bank Economic Review, World Bank, vol. 32(3), pages 692-708.
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    Keywords

    Agricultural Finance; Risk and Uncertainty;

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