Dynamics of Demand for Rainfall Index Insurance : Evidence from a Commercial Product in India
This paper analyzes the dynamic nature of rainfall insurance purchasing decisions, specifically looking at whether and why receiving an insurance payout induces a greater chance of purchasing insurance again the next year. This analysis uses custom...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank Group, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2014/09/20212360/dynamics-demand-rainfall-index-insurance-evidence-commercial-product-india http://hdl.handle.net/10986/20381 |
| Summary: | This paper analyzes the dynamic nature
of rainfall insurance purchasing decisions, specifically
looking at whether and why receiving an insurance payout
induces a greater chance of purchasing insurance again the
next year. This analysis uses customer data from the Indian
micro-finance institution BASIX, and finds that receiving an
insurance payout is associated with a 9 to 22 percentage
points increased probability of purchasing insurance the
following year. This affect appears to be driven by
behavioral effects of receiving a payout, and cannot be
explained by trust, learning, or direct effects of weather.
Overall, low repurchasing rates even after payouts suggest
that current rainfall index insurance products are likely to
continue struggling to achieve significant sales at market prices. |
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