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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]
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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 

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