Index insurance for weather risk in lower-income countries

Publication´s abstract

The paper focuses on innovation in weather insurance (index insurance) designed to fit the special circumstances of lower-income countries where rural and agricultural financial markets are largely underdeveloped. The intent is to provide the reader with the information needed to determine the potential viability of using index insurance for weather risks.

The paper discusses the following topics:

• Effects of weather risk in lower-income countries
• Importance of weather insurance for lower-income countries
• Traditional weather insurance products for mitigation of agricultural weather risks
• Index insurance for weather risks
• The role of governments and donors
• Preconditions for and restrictions to index insurance
• Feasibility study for index insurance
• Pilot testing of index insurance

Applications of index insurance are described in short case studies about:

• India
• Mongolia
• Malawi
• Peru
• Mexico
• Ethiopia