Standard responses to major drought shocks have been post-drought restocking and food aid, but these efforts can often be slow and expensive. A possible alternative has been explored with index insurance. The appeals of using index insurance are payments are triggered immediately by an event, but do not insure individual losses. Instead, the concept of insuring through an "index" measure is that it is correlated with individual losses. However, index insurances need to be objectively verifiable, available at low cost in real time, and cannot be manipulable by either party to the contract.
This presentation is related to the AMA Innovation Lab projects for the Microfinance Products for Weather Risk Management in Developing Countries. This workshop approaches the efforts and difficulties of pursuing index-based weather insurance as a sustainable market-based product.
This presentation took place in Paris, France on June 25, 2014.