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Microinsurance : a case study of the Indian rainfall index insurance market

Author

Listed:
  • Gine, Xavier
  • Menand, Lev
  • Townsend, Robert
  • Vickery, James

Abstract

Rainfall index insurance provides a payout based on measured local rainfall during key phases of the agricultural season, and in principle can help rural households diversify a key source of idiosyncratic risk. This paper describes basic features of rainfall insurance contracts offered in India since 2003, and documents stylized facts about market demand and the distribution of payouts. The authors summarize the results of previous research on this market, which provides evidence that price, liquidity constraints, and trust all present significant barriers to increased take-up. They also discuss potential future prospects for rainfall insurance and other index insurance products.

Suggested Citation

  • Gine, Xavier & Menand, Lev & Townsend, Robert & Vickery, James, 2010. "Microinsurance : a case study of the Indian rainfall index insurance market," Policy Research Working Paper Series 5459, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5459
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    Cited by:

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    2. Farrin, Kathleen M. & Miranda, Mario J., 2013. "Premium Benefits? A Heterogeneous Agent Model of Credit-Linked Index Insurance and Farm Technology Adoption," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149666, Agricultural and Applied Economics Association.
    3. Lima Miquelluti, Daniel & Ozaki, Vitor & Miquelluti, David J., 2020. "An application of geographically weighted quantile LASSO to weather index insurance design," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304288, Agricultural and Applied Economics Association.
    4. Simplice A. Asongu & Jacinta C. Nwachukwu, 2018. "Recent finance advances in information technology for inclusive development: a systematic review," Netnomics, Springer, vol. 19(1), pages 65-93, October.
    5. Leigh Johnson, 2013. "Index Insurance and the Articulation of Risk-Bearing Subjects," Environment and Planning A, , vol. 45(11), pages 2663-2681, November.
    6. Shawn Cole & Xavier Gine & Jeremy Tobacman & Petia Topalova & Robert Townsend & James Vickery, 2013. "Barriers to Household Risk Management: Evidence from India," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 104-135, January.
    7. Simplice A. Asongu & Jacinta C. Nwachukwu, 2017. "Recent finance advances in information technology for inclusive development: a survey," Research Africa Network Working Papers 17/009, Research Africa Network (RAN).
    8. Singh, Hardeep & Negi, Digvijay S. & Birthal, Pratap S., 2020. "Uncertain Monsoon, Irrigation and Crop Yields: Implications for Pricing of Insurance Products," EfD Discussion Paper 20-28, Environment for Development, University of Gothenburg.
    9. Felipe Kast & Dina Pomeranz, 2013. "Saving More to Borrow Less: Experimental Evidence from Access to Formal Savings Accounts in Chile," Harvard Business School Working Papers 14-001, Harvard Business School, revised Jun 2014.
    10. Shawn Cole & Xavier Giné & James Vickery, 2017. "How Does Risk Management Influence Production Decisions? Evidence from a Field Experiment," The Review of Financial Studies, Society for Financial Studies, vol. 30(6), pages 1935-1970.
    11. Michler, Jeffrey D. & Viens, Frederi & Shively, Gerald, 2015. "Risk, Agricultural Production, and Weahter Index Insurance in Village South Asia," 2015 Conference, August 9-14, 2015, Milan, Italy 212460, International Association of Agricultural Economists.
    12. Farrin, Katie & Miranda, Mario J., 2015. "A heterogeneous agent model of credit-linked index insurance and farm technology adoption," Journal of Development Economics, Elsevier, vol. 116(C), pages 199-211.
    13. Aguilar, Arturo & Vicarelli, Marta, 2022. "El Niño and children: Medium-term effects of early-life weather shocks on cognitive and health outcomes," World Development, Elsevier, vol. 150(C).
    14. Clarke,Daniel Jonathan & Mahul,Olivier & Rao,Kolli Nageswara & Verma,Niraj, 2012. "Weather based crop insurance in India," Policy Research Working Paper Series 5985, The World Bank.
    15. Xu, Lisa & Zia, Bilal, 2012. "Financial literacy around the world : an overview of the evidence with practical suggestions for the way forward," Policy Research Working Paper Series 6107, The World Bank.
    16. Vieider, Ferdinand M. & Truong, Nghi & Martinsson, Peter & Pham Khanh Nam & Martinsson, Peter, 2013. "Risk preferences and development revisited: A field experiment in Vietnam," Discussion Papers, WZB Junior Research Group Risk and Development SP II 2013-403, WZB Berlin Social Science Center.

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    Keywords

    Climate Change Economics; Insurance Law; Debt Markets; Financial Literacy; Insurance&Risk Mitigation;
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