Patterns of Rainfall Insurance Participation in Rural India
This paper describes the contract design and institutional features of an innovative rainfall insurance policy offered to smallholder farmers in rural India, and presents preliminary evidence on the determinants of insurance participation. Insuranc...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2007/11/8738363/patterns-rainfall-insurance-participation-rural-india http://hdl.handle.net/10986/7646 |
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okr-10986-76462021-04-23T14:02:34Z Patterns of Rainfall Insurance Participation in Rural India Gine, Xavier Townsend, Robert Vickery, James ACCESS TO CREDIT ACCOUNTING ACCURATE ESTIMATE ADDITIONAL INCOME ADMINISTRATIVE CHARGE ADMINISTRATIVE COSTS ADMINISTRATIVE RECORDS AGENTS AGRICULTURAL ECONOMICS AGRICULTURAL INCOME AGRICULTURAL INSURANCE AGRICULTURAL SECTOR ASSET MARKETS ASYMMETRIC INFORMATION BANK ACCOUNT BANK FEES BASIS RISK BID BORROWER BORROWING BUSINESS SCHOOL BUYER BUYERS CALCULATION CALCULATIONS COLLATERAL COMMODITY COMMODITY PRICE CONSUMER CONSUMPTION SMOOTHING CONTRACT DESIGN COVERAGE CREDIT AVAILABILITY CREDIT CONSTRAINTS CREDIT INSTITUTION CREDIT OUTSTANDING CREDIT PRODUCTS CREDIT RATIONING CREDIT WORTHINESS CROP FAILURE CROP INSURANCE CROP INSURANCE SCHEME CROP LOAN CROP LOANS DEBT DEBTOR DEFAULTS DEGREE OF RISK DEPOSITS DEVELOPING COUNTRIES DISCOUNT RATE DISCOUNT RATES DROUGHT DUMMY VARIABLE DUMMY VARIABLES EDUCATION LEVEL EQUILIBRIUM MODELS EXCHANGE RATE EXPENDITURE EXPENDITURES FAMILY MEMBERS FARMER FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE BANK OF NEW YORK FINANCIAL CONSTRAINTS FINANCIAL INNOVATIONS FINANCIAL INSTITUTION FINANCIAL PRODUCT FINANCIAL SERVICES FINANCIAL SYSTEMS FIRE INSURANCE FIXED COSTS FORMAL EDUCATION FORMAL FINANCIAL INSTITUTION FORMAL FINANCIAL INSTITUTIONS FUTURE INCOME GENDER GOVERNMENT ASSISTANCE GOVERNMENT CROP INSURANCE GOVERNMENT SUBSIDIES GROSS REVENUE GROUP LENDING HEALTH INSURANCE HIGH INTEREST RATES HOUSEHOLD INCOME HOUSEHOLD WEALTH HOUSEHOLDS IMPERFECT INFORMATION INCOME INCOME SHOCKS INCOME SMOOTHING INCOME VOLATILITY INSURANCE INSURANCE BUYERS INSURANCE CLAIMS INSURANCE CONTRACTS INSURANCE EXPENDITURES INSURANCE MARKET INSURANCE MARKETS INSURANCE POLICIES INSURANCE POLICY INSURANCE PRODUCT INSURANCE SCHEME INTEREST RATE INTEREST RATES INTERNATIONAL BANK JOB LOSS LACK OF COLLATERAL LACK OF CREDIT LANDOWNER LIFE INSURANCE LIQUID ASSETS LIQUID SAVINGS LOAN LOAN APPLICATIONS LOCAL AREA BANK LOCAL FINANCIAL INSTITUTIONS LUMP SUM MARKET VALUE MARKETING MICRO-CREDIT MICRO-INSURANCE MICROCREDIT MICROFINANCE MICROFINANCE INSTITUTION MICROFINANCE LOANS MICROINSURANCE MIGRATION MITIGATION MORAL HAZARD OUTSTANDING CREDIT PENETRATION RATE PENSIONS POLICY DESIGN POLICYHOLDERS PREMIUM RATE PREMIUMS PRICE CHANGES PROBABILITIES PROBABILITY PROGRAM COSTS PROGRAMS PURCHASES REINSURERS RESERVE BANK RETURN RETURNS REVOLVING FUNDS RISK AVERSION RISK SHARING SALES SALES REVENUE SAVINGS SELF-EMPLOYMENT SMALL BUSINESS SMALL BUSINESS OWNER SMALLHOLDER SMALLHOLDER FARMERS SMALLHOLDERS SOCIAL DEVELOPMENT SOCIAL NETWORKS TAX TECHNICAL ASSISTANCE VILLAGE VILLAGES VULNERABLE HOUSEHOLDS WAGES This paper describes the contract design and institutional features of an innovative rainfall insurance policy offered to smallholder farmers in rural India, and presents preliminary evidence on the determinants of insurance participation. Insurance takeup is found to be decreasing in basis risk between insurance payouts and income fluctuations, increasing in household wealth and decreasing in the extent to which credit constraints bind. These results match with predictions of a simple neoclassical model appended with borrowing constraints. Other patterns are less consistent with the "benchmark" model; namely, participation in village networks and measures of familiarity with the insurance vendor are strongly correlated with insurance takeup decisions, and risk-averse households are found to be less, not more, likely to purchase insurance. We suggest that these results reflect household uncertainty about the product itself, given their limited experience with it. 2012-06-11T15:10:28Z 2012-06-11T15:10:28Z 2007-11 http://documents.worldbank.org/curated/en/2007/11/8738363/patterns-rainfall-insurance-participation-rural-india http://hdl.handle.net/10986/7646 English Policy Research Working Paper; No. 4408 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research South Asia India |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCESS TO CREDIT ACCOUNTING ACCURATE ESTIMATE ADDITIONAL INCOME ADMINISTRATIVE CHARGE ADMINISTRATIVE COSTS ADMINISTRATIVE RECORDS AGENTS AGRICULTURAL ECONOMICS AGRICULTURAL INCOME AGRICULTURAL INSURANCE AGRICULTURAL SECTOR ASSET MARKETS ASYMMETRIC INFORMATION BANK ACCOUNT BANK FEES BASIS RISK BID BORROWER BORROWING BUSINESS SCHOOL BUYER BUYERS CALCULATION CALCULATIONS COLLATERAL COMMODITY COMMODITY PRICE CONSUMER CONSUMPTION SMOOTHING CONTRACT DESIGN COVERAGE CREDIT AVAILABILITY CREDIT CONSTRAINTS CREDIT INSTITUTION CREDIT OUTSTANDING CREDIT PRODUCTS CREDIT RATIONING CREDIT WORTHINESS CROP FAILURE CROP INSURANCE CROP INSURANCE SCHEME CROP LOAN CROP LOANS DEBT DEBTOR DEFAULTS DEGREE OF RISK DEPOSITS DEVELOPING COUNTRIES DISCOUNT RATE DISCOUNT RATES DROUGHT DUMMY VARIABLE DUMMY VARIABLES EDUCATION LEVEL EQUILIBRIUM MODELS EXCHANGE RATE EXPENDITURE EXPENDITURES FAMILY MEMBERS FARMER FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE BANK OF NEW YORK FINANCIAL CONSTRAINTS FINANCIAL INNOVATIONS FINANCIAL INSTITUTION FINANCIAL PRODUCT FINANCIAL SERVICES FINANCIAL SYSTEMS FIRE INSURANCE FIXED COSTS FORMAL EDUCATION FORMAL FINANCIAL INSTITUTION FORMAL FINANCIAL INSTITUTIONS FUTURE INCOME GENDER GOVERNMENT ASSISTANCE GOVERNMENT CROP INSURANCE GOVERNMENT SUBSIDIES GROSS REVENUE GROUP LENDING HEALTH INSURANCE HIGH INTEREST RATES HOUSEHOLD INCOME HOUSEHOLD WEALTH HOUSEHOLDS IMPERFECT INFORMATION INCOME INCOME SHOCKS INCOME SMOOTHING INCOME VOLATILITY INSURANCE INSURANCE BUYERS INSURANCE CLAIMS INSURANCE CONTRACTS INSURANCE EXPENDITURES INSURANCE MARKET INSURANCE MARKETS INSURANCE POLICIES INSURANCE POLICY INSURANCE PRODUCT INSURANCE SCHEME INTEREST RATE INTEREST RATES INTERNATIONAL BANK JOB LOSS LACK OF COLLATERAL LACK OF CREDIT LANDOWNER LIFE INSURANCE LIQUID ASSETS LIQUID SAVINGS LOAN LOAN APPLICATIONS LOCAL AREA BANK LOCAL FINANCIAL INSTITUTIONS LUMP SUM MARKET VALUE MARKETING MICRO-CREDIT MICRO-INSURANCE MICROCREDIT MICROFINANCE MICROFINANCE INSTITUTION MICROFINANCE LOANS MICROINSURANCE MIGRATION MITIGATION MORAL HAZARD OUTSTANDING CREDIT PENETRATION RATE PENSIONS POLICY DESIGN POLICYHOLDERS PREMIUM RATE PREMIUMS PRICE CHANGES PROBABILITIES PROBABILITY PROGRAM COSTS PROGRAMS PURCHASES REINSURERS RESERVE BANK RETURN RETURNS REVOLVING FUNDS RISK AVERSION RISK SHARING SALES SALES REVENUE SAVINGS SELF-EMPLOYMENT SMALL BUSINESS SMALL BUSINESS OWNER SMALLHOLDER SMALLHOLDER FARMERS SMALLHOLDERS SOCIAL DEVELOPMENT SOCIAL NETWORKS TAX TECHNICAL ASSISTANCE VILLAGE VILLAGES VULNERABLE HOUSEHOLDS WAGES |
| spellingShingle |
ACCESS TO CREDIT ACCOUNTING ACCURATE ESTIMATE ADDITIONAL INCOME ADMINISTRATIVE CHARGE ADMINISTRATIVE COSTS ADMINISTRATIVE RECORDS AGENTS AGRICULTURAL ECONOMICS AGRICULTURAL INCOME AGRICULTURAL INSURANCE AGRICULTURAL SECTOR ASSET MARKETS ASYMMETRIC INFORMATION BANK ACCOUNT BANK FEES BASIS RISK BID BORROWER BORROWING BUSINESS SCHOOL BUYER BUYERS CALCULATION CALCULATIONS COLLATERAL COMMODITY COMMODITY PRICE CONSUMER CONSUMPTION SMOOTHING CONTRACT DESIGN COVERAGE CREDIT AVAILABILITY CREDIT CONSTRAINTS CREDIT INSTITUTION CREDIT OUTSTANDING CREDIT PRODUCTS CREDIT RATIONING CREDIT WORTHINESS CROP FAILURE CROP INSURANCE CROP INSURANCE SCHEME CROP LOAN CROP LOANS DEBT DEBTOR DEFAULTS DEGREE OF RISK DEPOSITS DEVELOPING COUNTRIES DISCOUNT RATE DISCOUNT RATES DROUGHT DUMMY VARIABLE DUMMY VARIABLES EDUCATION LEVEL EQUILIBRIUM MODELS EXCHANGE RATE EXPENDITURE EXPENDITURES FAMILY MEMBERS FARMER FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE BANK OF NEW YORK FINANCIAL CONSTRAINTS FINANCIAL INNOVATIONS FINANCIAL INSTITUTION FINANCIAL PRODUCT FINANCIAL SERVICES FINANCIAL SYSTEMS FIRE INSURANCE FIXED COSTS FORMAL EDUCATION FORMAL FINANCIAL INSTITUTION FORMAL FINANCIAL INSTITUTIONS FUTURE INCOME GENDER GOVERNMENT ASSISTANCE GOVERNMENT CROP INSURANCE GOVERNMENT SUBSIDIES GROSS REVENUE GROUP LENDING HEALTH INSURANCE HIGH INTEREST RATES HOUSEHOLD INCOME HOUSEHOLD WEALTH HOUSEHOLDS IMPERFECT INFORMATION INCOME INCOME SHOCKS INCOME SMOOTHING INCOME VOLATILITY INSURANCE INSURANCE BUYERS INSURANCE CLAIMS INSURANCE CONTRACTS INSURANCE EXPENDITURES INSURANCE MARKET INSURANCE MARKETS INSURANCE POLICIES INSURANCE POLICY INSURANCE PRODUCT INSURANCE SCHEME INTEREST RATE INTEREST RATES INTERNATIONAL BANK JOB LOSS LACK OF COLLATERAL LACK OF CREDIT LANDOWNER LIFE INSURANCE LIQUID ASSETS LIQUID SAVINGS LOAN LOAN APPLICATIONS LOCAL AREA BANK LOCAL FINANCIAL INSTITUTIONS LUMP SUM MARKET VALUE MARKETING MICRO-CREDIT MICRO-INSURANCE MICROCREDIT MICROFINANCE MICROFINANCE INSTITUTION MICROFINANCE LOANS MICROINSURANCE MIGRATION MITIGATION MORAL HAZARD OUTSTANDING CREDIT PENETRATION RATE PENSIONS POLICY DESIGN POLICYHOLDERS PREMIUM RATE PREMIUMS PRICE CHANGES PROBABILITIES PROBABILITY PROGRAM COSTS PROGRAMS PURCHASES REINSURERS RESERVE BANK RETURN RETURNS REVOLVING FUNDS RISK AVERSION RISK SHARING SALES SALES REVENUE SAVINGS SELF-EMPLOYMENT SMALL BUSINESS SMALL BUSINESS OWNER SMALLHOLDER SMALLHOLDER FARMERS SMALLHOLDERS SOCIAL DEVELOPMENT SOCIAL NETWORKS TAX TECHNICAL ASSISTANCE VILLAGE VILLAGES VULNERABLE HOUSEHOLDS WAGES Gine, Xavier Townsend, Robert Vickery, James Patterns of Rainfall Insurance Participation in Rural India |
| geographic_facet |
South Asia India |
| relation |
Policy Research Working Paper; No. 4408 |
| description |
This paper describes the contract design
and institutional features of an innovative rainfall
insurance policy offered to smallholder farmers in rural
India, and presents preliminary evidence on the determinants
of insurance participation. Insurance takeup is found to be
decreasing in basis risk between insurance payouts and
income fluctuations, increasing in household wealth and
decreasing in the extent to which credit constraints bind.
These results match with predictions of a simple
neoclassical model appended with borrowing constraints.
Other patterns are less consistent with the
"benchmark" model; namely, participation in
village networks and measures of familiarity with the
insurance vendor are strongly correlated with insurance
takeup decisions, and risk-averse households are found to be
less, not more, likely to purchase insurance. We suggest
that these results reflect household uncertainty about the
product itself, given their limited experience with it. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Gine, Xavier Townsend, Robert Vickery, James |
| author_facet |
Gine, Xavier Townsend, Robert Vickery, James |
| author_sort |
Gine, Xavier |
| title |
Patterns of Rainfall Insurance Participation in Rural India |
| title_short |
Patterns of Rainfall Insurance Participation in Rural India |
| title_full |
Patterns of Rainfall Insurance Participation in Rural India |
| title_fullStr |
Patterns of Rainfall Insurance Participation in Rural India |
| title_full_unstemmed |
Patterns of Rainfall Insurance Participation in Rural India |
| title_sort |
patterns of rainfall insurance participation in rural india |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2007/11/8738363/patterns-rainfall-insurance-participation-rural-india http://hdl.handle.net/10986/7646 |
| _version_ |
1764402631883620352 |