GIIF assists Governments and Regulation authorities at all stages of the legal and regulatory process. From the assessment of the current legislation, to the drafting of a new bill, GIIF legal experts provide technical assistance to Governments in order to build sustainable insurance markets in the long term. In some cases, GIIF experts also prepare regulatory and supervisory documents and train executive staff on the implementation of the new legislation. These activities can be carried out at national level ( See WB-Legal and regulatory work) or at regional level ( See GIIF project with CIMA

The GIIF IFC Team has provided grants to implementing “broker” partners in the private sector globally to build index insurance markets. The GIIF WB Team has focused on creating an enabling legal and regulatory environment for index insurance, feasibility studies and pilot projects. (See GIIF projects in sub-Saharan Africa, Latin America and the Caribbean, and Asia Pacific.)

Basis risk in index insurance arises when the index measurements do not match an individual insured’s actual losses. There are two major sources of basis risk in index insurance. One source of basis risk stems from poorly designed products and the other from geographical elements. Product design basis risk is minimized through robust product design and backed by testing of contract parameters. Geographical basis risk is a factor of the distance between the index measurement location and the production field. The greater the distance between the measurement instrument and the field, the greater

Index insurance can cover risks at experienced at various levels. Micro-level index insurance covers individuals and has been implemented in countries like Senegal and Haiti . Meso level index insurance covers “risk aggregators” such as banks, microfinance institutions, agribusinesses or national export companies and has been promoted in countries like Dominican Republic with the National Federation of Cocoa Growers. (See partner projects Kilimo Salama/Syngenta . MicroEnsure , Guy Carpenter .) Most GIIF private sector implementing partners are now providing index insurance at the meso

Microinsurance is the protection of low-income people against specific perils in exchange for regular premium payment proportionate to the likelihood and cost of the risks involved. This definition is exactly the same as one might use for regular insurance except for the clearly prescribed target market: low-income people. Given its focus on low-income people, microinsurance usually differs from regular insurance in terms of types of risks covered, types of delivery channels, premiums level and types of claims documentation requirements. Microinsurance can cover a variety of risks, including

Area-yield index insurance : Area-yield index insurance was first developed in Sweden in the early 1950s and has been implemented in India since 1979 and in the United States since 1993. With this type of insurance, the indemnity is based on the realized (harvested) average yield of an area such as a county or district. The insured yield is established as a percentage of the average yield for the area (typically 50–90 percent of the area average yield). An indemnity is paid if the realized average yield for the area is less than the insured yield, regardless of the actual yield on a

Index insurance can be used to cover agricultural risks faced by small-scale farmers and herders (See examples on groundnut insurance in Senegal maize insurance in Benin ). However, index insurance also goes beyond agriculture. In Indonesia for instance, GIIF’s implementing partner PT Reasuransi Maipark provides insurance protection for MFIs against earthquakes, so the MFIs can avoid liquidity crisis and continue to provide access to finance to microentrepreneurs after a calamity.

Index insurance is a relatively new but innovative approach to insurance provision that pays out benefits on the basis of a predetermined index (e.g. rainfall level) for loss of assets and investments, primarily working capital, resulting from weather and catastrophic events. Because index insurance doesn't necessarily require the traditional services of insurance claims assessors, it allows for the claims settlement processes to be quicker and more objective. Before the start of the insurance period, a statistical index is developed. The index measures deviations from the normal level of