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Category: Insurance

Published May 11, 2011

Index Insurance in Africa

From a post on the New York Times‘ Opinionator blog:

“The insecurity of farming sabotages yields even when the weather is good.  Because of the risk, many farmers are unwilling to bet all their money on a crop, so they sow only a portion of their land.   Or they use poor quality seeds because they do not want to increase their risks by spending more.  Risk makes it very difficult for farmers to get credit to buy needed seeds, fertilizer, herbicides or insecticides, so their yields are stunted.  These are people who can ill afford to get less than the maximum from their plots.

Weather insurance for small farmers has always faced numerous barriers.  But throughout east Africa today there are projects finding creative and innovative ways to overcome them.”

This is quite à propos, as I am going to Washington, DC this weekend for the Index Insurance Innovation Initiative (I4) technical workshop, which will convene the I4 grant recipients to discuss the technical details of index insurance implementation and evaluation.

(HT: Chris Paul.)

 

Published March 6, 2011

More on Micro-Insurance

More often than not, economic underdevelopment is explained by development economists as being the consequence of multiple market failures. Among these market failures is the lack of insurance markets in most developing countries, which forces individuals and households into sinking considerable resources into averting major risks.

Suppose you are the head of a rural household in an African country. One such risk is the risk you will lose your assets. For example, you could lose some of your land as a consequence of land redistribution within the community, or a disease could decimate a significant fraction of your livestock.

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