Microinsurance : A Case Study of the Indian Rainfall Index Insurance Market

Rainfall index insurance provides a payout based on measured local rainfall during key phases of the agricultural season, and in principle can help rural households diversify a key source of idiosyncratic risk. This paper describes basic features of rainfall insurance contracts offered in India since 2003, and documents stylized facts about market demand and the distribution of payouts. The authors summarize the results of previous research on this market, which provides evidence that price, liquidity constraints, and trust all present significant barriers to increased take-up. They also discuss potential future prospects for rainfall insurance and other index insurance products.

Bibliographic Details

Main Authors:	Menand, Lev, Giné, Xavier, Townsend, Robert, Vickery, James
Language:	English
Published:	2010-10-01
Subjects:	ACCESS TO INFORMATION, ACCOUNTING, ADMINISTRATIVE COSTS, ADMINISTRATIVE DATA, AGRICULTURAL ECONOMICS, AGRICULTURAL INSURANCE, AGRICULTURAL INSURANCE SCHEME, ALLOCATION, BANK ACCOUNT, BANK POLICY, BANKS, BASIS RISK, BEHAVIORAL ECONOMICS, BONDS, BORROWING, BROKERS, BUSINESS SCHOOL, CALCULATIONS, CAPITAL MARKET, CASH PAYMENT, CLIMATE, CLIMATE CHANGE, CONSUMER, CONSUMER CREDIT, CONSUMER LOAN, CONSUMER PROTECTION, CONSUMPTION PATTERNS, CONSUMPTION SMOOTHING, CONTRACT DESIGN, CONTRIBUTION, COUPONS, CREDIT CONSTRAINTS, CREDIT PRODUCTS, CROP INSURANCE, CROP INSURANCE SCHEME, DAMAGES, DEBT, DEBT CAPACITY, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DISABILITY, DISBURSEMENTS, DIVERSIFICATION, DROUGHT, DROUGHT INSURANCE, DROUGHTS, ECONOMIC DEVELOPMENT, EMERGING MARKETS, EXPENDITURE, EXTREME TAIL, EXTREME WEATHER, EXTREME WEATHER EVENTS, FAMILY MEMBER, FAMILY MEMBERS, FAMILY PLANNING, FEDERAL RESERVE, FEDERAL RESERVE BANK, FINANCIAL ASSISTANCE, FINANCIAL CONSTRAINTS, FINANCIAL INNOVATION, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL LITERACY, FINANCIAL MARKET, FINANCIAL MARKETS, FINANCIAL PRODUCTS, FINANCIAL SERVICES, FINANCIAL SYSTEMS, FLOOD INSURANCE, GENERAL INSURANCE, GOVERNMENT ASSISTANCE, GOVERNMENT CROP INSURANCE, GOVERNMENT INSURANCE, GOVERNMENT SUBSIDIES, HOUSEHOLD CONSUMPTION, HOUSEHOLD INCOME, HOUSEHOLD INCOMES, HURRICANES, INCOME, INCOME SHOCKS, INCOME SMOOTHING, INCOME VARIABILITY, INDEMNITY, INFORMAL INSURANCE, INSURANCE, INSURANCE AGENTS, INSURANCE ARRANGEMENTS, INSURANCE COMPANIES, INSURANCE COMPANY, INSURANCE CONTRACT, INSURANCE CONTRACTS, INSURANCE COVERAGE, INSURANCE CULTURE, INSURANCE MARKET, INSURANCE MARKETS, INSURANCE PAYOUT, INSURANCE POLICIES, INSURANCE POLICY, INSURANCE PREMIUMS, INSURANCE PRODUCT, INSURANCE PRODUCTS, INSURANCE REGULATIONS, INSURANCE SCHEME, INSURANCE SCHEMES, INSURANCE UNDERWRITERS, INSURERS, INTEREST RATE, INTEREST RATES, INTEREST WAIVERS, INTERNATIONAL BANK, INTERNATIONAL DEVELOPMENT, INTERNATIONAL MARKETS, INVESTMENT CHOICE, LABOR MARKETS, LABOR SUPPLY, LANDOWNERS, LIQUID ASSETS, LIQUIDATION, LIQUIDITY, LIQUIDITY CONSTRAINTS, LIVESTOCK INSURANCE, LIVING STANDARDS, LOAN, LOAN DEMAND, LOCAL AREA BANK, LOCAL FINANCIAL INSTITUTIONS, LOST INCOME, LOW-INCOME, LOW-INCOME INDIVIDUALS, LOWER PRICES, MACROECONOMIC VOLATILITY, MARGINAL UTILITY, MARGINAL UTILITY OF CONSUMPTION, MARKET COMPETITION, MARKET DEMAND, MARKET PENETRATION, MARKET SHARE, MARKET SIZE, MARKET STRUCTURE, MARKETING, MATURE MARKET, MICRO INSURANCE, MICROCREDIT, MICROFINANCE, MICROFINANCE INSTITUTION, MICROFINANCE INSTITUTIONS, MICROINSURANCE, MONEYLENDERS, MORAL HAZARD, NATIONAL INSURANCE, NATURAL DISASTERS, OTHER ASSETS, POLICYHOLDERS, PORTFOLIO, PRICE OF COAL, PROBABILITY, PRODUCTIVITY, PROGRAMS, PURCHASES, RATE OF RETURN, RATES OF RETURN, REINSURANCE, REMITTANCE, REMITTANCES, RESOURCE ALLOCATION, RETURNS, RISK AVERSION, RISK INSURANCE, RISK MANAGEMENT, RISK MITIGATION, RISK OF DEFAULT, RISK REDUCTION, RISK SHARING, RISK TAKING, RISKS OF CLIMATE CHANGE, SALE, SALES, SAVINGS, SETTLEMENT, SOCIOECONOMIC STATUS, STOCK MARKET, SUSTAINABILITY, TRANSACTION, TRANSACTION COSTS, TRANSITORY INCOME, UNDERINSURED, UNDERWRITERS, VALUABLE, VALUATION, WEATHER INSURANCE, WELFARE PROGRAMS, WORST-CASE, WORTH,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111116161636 https://hdl.handle.net/10986/4002
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