Index Insurance and the Articulation of Risk-Bearing Subjects

Abstract

In the last decade a growing number of efforts have been made to insure the weather-related production risks of rural agricultural households in the Global South via microinsurance contracts linked to environmental indices. Such index insurance products are increasingly championed for their ostensible capacity to decrease vulnerability, 'crowd in' rural credit, and increase productive risk taking. This paper presents an empirical and theoretical framework for understanding the explosion of these projects, demonstrating that the formation of financial consumer subjects who are themselves agricultural producers is an emerging and consequential process within the dynamics of (dis)articulation. Rather than being hindered by the absence of the real subsumption of land or labor to capital, the derivative nature of the index insurance form-offering only the possibility of remuneration instead of indemnification of loss-makes it especially well suited to operating in precisely such conditions on the edges of (non)market relations.

The rise of flex crops and commodities: implications for research

“…For financiers, the rising uncertainty that has accompanied the privatization of agricultural risk represents a new avenue for speculation. They have promoted a variety of financial instruments that purportedly help farmers mitigate risk, including the increasingly prevalent instrument of weatherbased index insurance aimed at small-scale producers (Johnson 2013;Isakson 2015). Yet, like credit, oftentimes insurance is only offered for specified crops, namely those on which underwriters are willing to gamble (Isakson 2015).…”

Climate-smart agriculture global research agenda: scientific basis for action

“…This then reduces transaction costs associated with verifying ownership and losses, removes the opportunity for individuals to change their risk behaviours to increase the likelihood of receiving a payout, and allays the problem of adverse selection, in which high risk individuals are disproportionately represented in the insured pool. Most vitally, the rural poor are no longer widely excluded from insurance by the need to demonstrate assets as a prerequisite to purchasing a policy [161]. For example, the Index Based Livestock Insurance (IBLI) programme recently launched by The Index Insurance Innovation Initiative seeks to accurately represent the insured's loss experience through the use of landscape-level data derived from measures such as the Normalized Difference Vegetation Index (NDVI) ( Figure 5).…”

“…Appropriate risk management tools, such as improved forecasts and extension support, and appropriately designed safety nets or insurance instruments must revolve around the vulnerabilities in specific farming situations. Rural households in developing countries, limited in both resources and access to information, could be disproportionately affected unless appropriate measures are introduced to manage the additional risk and uncertainty related to climate change [159][160][161]. Innovative management of risk and uncertainty employs financial mechanisms (for example risk transfer or insurance contracts) that use several types of methods to understand investment decisions, technology choices, and risk perceptions.…”

Catastrophic fixes: cyclical devaluation and accumulation through climate change impacts

“…(4) First, geographical expansion into new markets to absorb more insurance capital has long been a central business strategy of the industry, and major reinsurers and brokers have identified emerging markets and ''underinsured'' spaces as the preeminent growth opportunity for at least the past decade (Johnson, 2013b;LoboGuerrero, 2010). The promise of ''1.5 to 3 billion insurance policies... waiting to be sold... in the developing world'' (Lloyd's, 2009: 36) epitomizes the escape from crisis via the ''outer transformation'' of capitalism (Jessop, 2006): the export of surplus capital beyond the region in which it was generated.…”