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Challenges for use of index‐based weather insurance in lower income countries

Agricultural Finance Review

ISSN: 0002-1466

Article publication date: 5 May 2008

Abstract

This article offers some perspective on the progress and challenges of managing catastrophic weather risk in lower income countries through the use of index insurance. Innovations in insurance for natural disaster risk are critically important to help the rural poor improve their lives and to contribute to the overall economic growth in lower income countries. By reviewing lessons learned from various index insurance projects, several conclusions are made about how best to approach weather risk management to benefit the livelihoods of the rural poor. It is important to recognize the limitations of index insurance and that it is not a substitute for crop insurance. However, using index insurance to address catastrophic risk can serve as the foundation for the development of broader financial services by removing one of the major constraints to market development. This in turn can offer households more effective strategies for consumption smoothing in the face of different sources and magnitudes of risk.

Keywords

Citation

Skees, J.R. (2008), "Challenges for use of index‐based weather insurance in lower income countries", Agricultural Finance Review, Vol. 68 No. 1, pp. 197-217. https://doi.org/10.1108/00214660880001226

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited