For eight years, Chandrasiri Vanasunder, a small holderfamerin the Ratnapura district of Sri Lanka, bore the lossescaused by drought and excess-rainfall on his 2-acre teaestate. But all that begun tochange in 2012, when a salesrepresentative from Sanasa told him about ‘index-basedinsurance’ for tea plants. “As soon as I heard about theproduct, I knew that this was a good product. I have sufferedsevere losses in the past, and this seemed like a smart ideato help me prepare for future uncertainty.” Vanasunder’sjudgment proved right, as approximately half -way throughthe last season, he received

This study explores the feasibility of weather index insurance (WII) in providing cost-effective ways for rural dwellers to manage risk and better cope with catastrophic events. The case study analyzed is drought coverage for maize production risk in Eastern Indonesia. Indonesia is considered one of the more vulnerable countries to hydro-meteorological risks in Asia. In some agricultural areas, harvest and production dip significantly during ENSO (El Niño Southern Oscillation) events due to belownormal rainfall. Indonesian production is highly dependent upon rainfall. Only 17 percent of the

Full Publication Cotton is the major cash crop of Cameroon, however, even if it represents a quarter of agricultural exports it is only about six percent of total exports (Gergerly, 2009). The cotton society: SODECOTON (Soci´et´e de D´eveloppement du Coton du Cameroun) and the CMDT its Malian counterpart, are the only West African cotton societies that are still public monopsonies. Those parastatals are thus the only agent in the country to buy cot- ton from producers at pan-seasonally and -territorially fixed price (Delpeuch and Leblois, forthcoming). The national cotton producers

Source: ILO Impact Insurance Full publication In the Sudano-sahelian region, which includes Northern Cameroon, the inter-annual variability of the rainy season is high and irrigation is scarce. As a consequence, bad rainy seasons have a massive impact on crop yield and regularly entail food crises. Traditional insurances based on crop damage assessment are not available because of asymmetric information and high transaction costs compared to the value of production. Moreover the important spatial variability of the weather creates a room for pooling the impact of bad weather using index-based

We show theoretically that the presence of basis risk in index insurance makes it a complement to informal risk sharing, implying that index insurance crowds-in risk sharing and leading to a prediction that demand will be higher among groups of individuals that can share risk. We report results from Ethiopia from a first attempt to marketweather insurance to informal risk-sharing groups.

Full Publication In various forms microinsurance has been available to some low-income people in Africa for a number of years. Cooperative Insurers have serviced a market that spans the income ranges since the 1970s. In the 1980s, community-based health insurance schemes, especially in West Africa, followed the Bamako Initiative. In the mid-1990s, commercial insurers began to enter the market offering specialized microinsurance products. Informal microinsurance has been available for decades in a range of forms, from “tontines” in West Africa or “friend in need” groups in East Africa to burial

Full Publication Microinsurance is a unique topic for a Lloyd’s 360 Risk Insight report. Usually, we advise businesses on managing emerging risks but this report focuses more on opportunity than emerging risk. Produced by Lloyd’s and the MicroInsurance Centre, this report sets out the understanding, mechanisms and partnerships needed to deliver insurance to three billion low income individuals across the globe, and how this will bring benefits to both the developing world and the insurance industry. Microinsurance is not charity, it is business, but it will require insurers to change their

Full Publication Unlike conventional insurance, which indemnifies policyholders for verifiable production losses arising from multiple perils, index insurance indemnifies policyholders based on the observed value of a specified “index” or some other closely related variable that is highly correlated with losses. Index insurance exhibits lower transaction costs than conventional insurance, potentially making it more affordable to the poor in the developing world. However, it also offers less effective individual risk protection. This article provides a review of recent theoretical and empirical

Microinsurance pioneers and practitioners frequently underline their social focus but are often unable to support these intentions with figures and adapted reports. The social performance indicators presented in this handbook allow practitioners to go beyond good intentions by monitoring and documenting their social performance and improving their operations accordingly. This handbook describes a framework, which includes a set of principles, guidelines and key performance indicators, that is designed to support microinsurance practitioners to monitor, improve and champion social performance

Microinsurance is regarded by some as a risk management mechanism that the poor can use to compensate for the lack of appropriate state-sponsored social protection programmes. Alternatively, it is viewed by others as an opportunity to provide financial services to the low-income market at a profit. Regardless of where the emphasis is placed, all microinsurance programmes should aim to become viable since donor or government subsidies are either only temporary or not available. Without subsidies, all programmes are subject to the same economic and market forces as mainstream businesses, and