Insuring the Never Before Insured: Explaining Index Insurance Through Financial Education Games

Carter, M.R.; Barrett, Christopher B.; Boucher, Stephen R.; Chantarat, Sommarat; Galarza, Francisco; McPeak, John G.; Mude, Andrew G.; Trivelli, Carolina

doi:10.2139/ssrn.1845513

Cited by 24 publications

(18 citation statements)

References 6 publications

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“…In both Kenya and Peru, the researchers observed that most farmers chose to purchase some level of insurance, and also were able to infer which payout structures -in terms of thresholds of the index -were most attractive to farmers. What Carter et al (2008) did not test, however, was the extent to which games make a measurable difference, or correlate with, participants understanding of insurance.…”

Section: Introductionmentioning

confidence: 99%

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How do small-holder farmers understand insurance, and how much do they want it? Evidence from Africa

Patt

Suarez

Hess

2010

Global Environmental Change

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Section: Introductionmentioning

confidence: 99%

“…Carter et al (2008) report on games that they developed and administered among cotton farmers in Peru and herders in Kenya. In both games, they attempted to tailor the games as closely as possible to actual market conditions.…”

Section: Introductionmentioning

confidence: 99%

How do small-holder farmers understand insurance, and how much do they want it? Evidence from Africa

Patt

Suarez

Hess

2010

Global Environmental Change

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“…As such, insurers in the Global North have always had to confront problems of trust and risk perception to create markets for their products (Baker, 1994). Nevertheless, creating willing buyers out of "the never-before-insured" (Carter et al, 2008) has proved even more difficult in rural areas of the Global South. General literacy and numeracy, to say nothing of (16) For greater detail on reinsurance pricing, particularly with respect to climate change, refer to Johnson (2010;2014) (17) Interview, Zürich, December 2011. financial literacy, is uneven.…”

Section: The Creation Of Risk-bearing Subjectsmentioning

confidence: 99%

Index Insurance and the Articulation of Risk-Bearing Subjects

Johnson

2013

Environ Plan A

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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.

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“…Others cite basis risk or the residual risk that often remains with the index insurance holder as a major issue [14,[23][24][25][26]. Several field experimental studies were undertaken to better understand farmers' insurance demand and its determinants [27][28][29]. However, farmers' preferences and willingness to pay for specific attributes of WII contracts have rarely been analyzed.…”

Section: Introductionmentioning

confidence: 99%

Small farmers’ preferences for weather index insurance: insights from Kenya

2018

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Background: Smallholder farmers in developing countries are particularly vulnerable to climate shocks but often lack access to agricultural insurance. Weather index insurance (WII) could reduce some of the problems associated with traditional, indemnity-based insurance programs, but uptake has been lower than expected. One reason is that WII contracts are not yet sufficiently tailored to the needs and preferences of smallholder farmers. This study combines survey and choice-experimental data from Kenya to analyze the experience with an existing WII program and how specific changes in the contractual design might encourage uptake.Results: Many smallholders struggle with fully understanding the functioning of the program, which undermines their confidence. Regular provision of relevant rainfall measurements and thresholds would significantly increase farmers' willingness to pay for WII. Mechanisms to reduce basis risk are also positively valued by farmers, although not to the same extent as higher levels of transparency. Finally, offering contracts to small groups rather than individual farmers could increase insurance uptake. Conclusions:Better training on WII and regular communication are needed. Group contracts may help to reduce transaction costs. Farmer groups can also be important platforms for learning about complex innovations, including novel risk transfer products. These concrete results are specific to Kenya; however, they provide some broader policyrelevant insights into typical issues of WII in a small-farm context.

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Insuring the Never Before Insured: Explaining Index Insurance Through Financial Education Games

Cited by 24 publications

References 6 publications

How do small-holder farmers understand insurance, and how much do they want it? Evidence from Africa

How do small-holder farmers understand insurance, and how much do they want it? Evidence from Africa

Index Insurance and the Articulation of Risk-Bearing Subjects

Small farmers’ preferences for weather index insurance: insights from Kenya

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