Index insurance and risk management

Paper: Asset Insurance Markets and Chronic Poverty

This paper investigates asset insurance into a theoretical poverty trap model to evaluate the aggregate impact of insurance access on chronic and transitory poverty. The research team uses dynamic stochastic programming methods to decompose two mechanisms through which a competitive asset insurance market might alter long-term poverty dynamics.

Paper: Insuring against Droughts: Evidence on Agricultural Intensification and Index Insurance Demand from a Randomized Evaluation in Rural Bangladesh

It is widely acknowledged that unmitigated risks provide a disincentive for otherwise optimal investments in modern farm inputs. This study assesses both the demand for and the effectiveness of an innovative index insurance product designed to help smallholder farmers in Bangladesh manage risk to crop yields and the increased production costs associated with drought.

Paper: Risk, Insurance and Wages in General Equilibrium

The research team estimates the general-equilibrium labor market effects of a large-scale randomized intervention designed and markets a rainfall index insurance product across three states in India.  Marketing agricultural insurance to both cultivators and to agricultural wage laborers allows the team to test a general-equilibrium model of wage determination in settings where households supplying labor and households hiring labor face weather risk.

Presentation: So You're Thinking about Index Insurance?

This presentation was by Maria Rarieya from the International Centre for Evaluation and Development (ICED) on May 24, 2017 describing the benefits of using index-based insurance over costly traditional claims-based insurance.

Paper: Fail-safe Index Insurance Without the Cost: a Satellite Based Conditional Audit Approach

While index insurance offers a compelling solution to the problem of covariant risk among smallholder farmers in developing countries, most weather based contracts suffer from poor quality due to a low correlation between the index and farmer losses. This paper proposes and analyzes an alternative index insurance contract, which combines a satellite based index with the potential for a second-stage audit.

Paper: Targeted Social Protection in a Pastoralist Economy: Case Study from Kenya

Social protection programs are designed to help vulnerable populations—including pastoralists—maintain a basic level of wellbeing, manage risk, and cope with negative shocks. The research team uses evidence-based to understand the poverty dynamics in the pastoralist-based economy of northern Kenya’s arid and semi arid lands as a case study to discuss and compare the observed impacts of two different social protection schemes on heterogeneous pastoralist households.