Loading...
Please wait, while we are loading the content...
Similar Documents
From index to indemnity insurance using digital technology: Demand for picture-based crop insurance
| Content Provider | Consultative Group on International Agricultural Research (CGIAR) |
|---|---|
| Author | Ceballos, Francisco Kramer, Berber |
| Organization | IFPRI - Markets, Trade, and Institutions Division |
| Organization | IFPRI - Picture-Based Insurance |
| Spatial Coverage | India [IN] |
| Description | Production risk is pervasive in agriculture, yet smallholder farmers lack access to quality insurance. This is due to asymmetric information in markets for indemnity insurance, and high basis risk, limited trust, and poor understanding of index-based insurance. Digital technologies can help overcome these challenges by improving crop monitoring and yield prediction, allowing insurers to provide products that move towards indemnity insurance. Although this can potentially improve demand, it also comes at the risk of introducing adverse selection. We analyze this trade-off by eliciting willingness to pay for both index-based insurance and picture-based insurance (PBI) for visible crop damage through incentivized auctions with smallholder farmers in northwestern India. Participants reveal a higher willingness to pay for PBI than for index-based coverage. Although at commercial rates, demand remains low for either product, PBI improves demand at the subsidized premium levels maintained by India’s national insurance scheme. Moreover, we find no evidence of adverse selection. We conclude that digital technologies can facilitate a shift from index-based insurance to indemnity insurance. By reducing basis risk and strengthening trust and understanding, this can improve demand for crop insurance. |
| Sponsorship | International Initiative for Impact Evaluation |
| Related Links | https://cgspace.cgiar.org/items/be210d04-2ed2-4076-8af3-6cf94faef74e |
| File Format | |
| DOI | 10.2499/p15738coll2.133524 |
| Language | English |
| Publisher | International Food Policy Research Institute |
| Publisher Date | 2019-12-16 |
| Publisher Place | Washington, DC |
| Access Restriction | Open |
| Rights License | CC-BY-4.0 |
| Subject Keyword | Policies, Institutions, and Markets Insurance Innovation Willingness To Pay Technology Losses Crop Insurance Assessment Mobile Equipment Risk Selection Criteria Photography Digital Technology |
| Content Type | Text |
| Resource Type | Article |
| Subject | Agronomy and Crop Science Food Science Plant Science |
