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.