Hostname: page-component-586b7cd67f-t7fkt Total loading time: 0 Render date: 2024-11-22T18:36:22.882Z Has data issue: false hasContentIssue false
  • English
  • Français

Crop microinsurance: tackling poverty, one insurance policy at a time

Published online by Cambridge University Press:  15 May 2014

Agrotosh Mookerjee ,
Daniel Clarke ,
Dermot Grenham ,
James Sharpe  and
Daniel Stein
Agrotosh Mookerjee*
Affiliation:
MicroEnsure
Daniel Clarke
Affiliation:
The World Bank
Dermot Grenham
Affiliation:
Government Actuary Department of the United Kingdon
James Sharpe
Affiliation:
Sharpe Actuarial
Daniel Stein
Affiliation:
The World Bank
*
*Correspondence to: Daniel Stein, The World Bank, 1818 H St, Washington DC, 20433, USA. E-mail: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Crop index microinsurance is a novel product that has been piloted and implemented in many developing countries. We attempt to give an overview of crop index microinsurance, covering the major issues needed to design, price and implement a crop index microinurance programme. In some ways, providing insurance to the poor is fundamentally different to providing insurance to the middle-income or rich; in other ways, including in the actuarial fields of product design, pricing and risk financing, there are strong similarities. We offer a stylised discussion of these differences and similarities, with particular reference to issues of potential interest to actuaries, and propose an actuarial framework for crop index microinsurance. Case studies from Malawi and the Philippines provide examples for what does and what does not seem to work in crop index microinsurance, and motivation for further work needed.

Keywords

MicroinsuranceIndex insuranceDerivativeBasis riskHedge
Type
Papers
Information
Annals of Actuarial Science , Volume 8 , Issue 2 , September 2014 , pp. 253 - 280
Copyright
© Institute and Faculty of Actuaries 2014 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Bühlmann, H. (1967). Experience rating and credibility. ASTIN Bulletin, 4(3), 199–207.Google Scholar
Clarke, D. (2011). Insurance design for developing countries, DPhil in Economics, University of Oxford. Oxford.Google Scholar
Clarke, D.J., Mahul, K.N., Rao, O. & Verma, N. (2012a). Weather based crop insurance in India, World Bank Policy Research Working Paper No. 5985, World Bank. Washington, DC.CrossRefGoogle Scholar
Clarke, D.J., Mahul, O. & Verma, N. (2012b). Index based crop insurance product design and ratemaking: the case of the modified NAIS in India, World Bank Policy Research Working Paper No. 5986, World Bank. Washington, DC, USA.Google Scholar
Cole, S., Stein, D. & Tobacman, J. (2011). What’s rainfall insurance worth? mimeo.Google Scholar
Giné, X. & Yang, D. (2009). Insurance, credit, and technology adoption: field experimental evidence from Malawi. Journal of Development Economics, 1, 1–11.Google Scholar
Herzog, T.N. (1999). Introduction to credibility theory. Winsted: Actex Publications.Google Scholar
Hess, U. & Syroka, J. (2005). Weather-based insurance in Southern Africa: the case of Malawi, Agriculture and Rural Development Discussion Paper 13. The World Bank. Washington, DC.Google Scholar
Hess, U., Skees, J., Barnett, B., Stoppa, A. & Nash, J. (2005). Managing agricultural production risk: innovations in developing countries, report, The World Bank, Agriculture and Rural Development Department. Washington, DC.Google Scholar
Hill, R.V. & Nobles, M. (2010). Flexible insurance for heterogenous farmers: results from a small scale pilot in Ethiopia, mimeo.Google Scholar
IAIS and CGAP Working Group on Index Insurance. (2007). Issues in Regulation and Supervision of Microinsurance, working paper, IAIS, July. Basel.Google Scholar
IFFCO-Tokio. (2010). IFFCO-Tokio strengthens its commitment to Chhattisgarh, IFFCO-Tokio, press release.Google Scholar
Karlan, D., Osei, R.D., Osei-Akoto, I. & Udry, C. (2012). Agricultural decisions after relaxing credit and risk constraints, technical report, National Bureau of Economic Research. Cambridge.Google Scholar
Mahler, H.C. & Curtis, G.D. (2001). Credibility. Available online at the address https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CCoQFjAA&url=http%3A%2F%2Fwww.soa.org%2Ffiles%2Fpdf%2FC-21-01.pdf&ei=LCxZU6erFIWl0QWG94DICw&usg=AFQjCNGQu6DAxRIokwKtmcH3gP7xyn8WHg&sig2=gW0zMTrvDA0IhI09sY4uOQ&bvm=bv.65397613,d.d2k. Accessed on April 24, 2014.Google Scholar
Mahul, O. & Stutley, C.J. (2010). Government Support to Agricultural Insurance: Challenges and Options for Developing Countries. World Bank Publications. Washington, DC.Google Scholar
Mahul, O., Clarke, D.J. & Verma, N. (2012). Improving farmers’ access to agricultural insurance in India, World Bank Policy Research Working Paper No. 5987, World Bank. Washington, DC.Google Scholar
Manuamorn, O.P. (2007). Scaling up microinsurance: the case of weather insurance for smallholders in India, Agriculture and Rural Development Discussion Paper. The World Bank. Washington, DC.Google Scholar
Mobarak, A.M. & Rosenzweig, M.R. (2013). Informal risk sharing, index insurance, and risk taking in developing countries. American Economic Review, 3, 375–380.Google Scholar
Ross, W. (2006). Satellite images help insure Kenya cattle. Available online at the address http://news.bbc.co.uk/1/hi/8475548.stm. Accessed April 24, 2014.Google Scholar
Sen, A. (1995). The political economy of targeting. In D. Walle & K. Nead (Eds.), Public Spending and the Poor: Theory and Evidence chapter 2, 11–23. The World Bank. Washington, DC.Google Scholar
Stein, D. (2014). Dynamics of demand for rainfall index insurance: evidence from a commercial product in India, technical report, mimeo.CrossRefGoogle Scholar
Stein, D. & Tobacman, J. (2014). Weather insurance savings accounts, mimeo.CrossRefGoogle Scholar