Library Publications Towards De-risking Disasters

Towards De-risking Disasters

16 Dec 2013 14189
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Although common in developed countries, risk-transfer approaches such as insurance are not generally available in developing countries, where insurance markets are limited and not oriented towards low-income clientele. High transaction costs, the possibility of adverse selection and the need for initial investment keeps insurers away from microinsurance for disaster protection in these countries. Index insurance is a new type of insurance that offers new opportunities for managing climate risk in developing countries. It is linked to an index, such as rainfall, temperature, humidity or crop yields, rather than actual loss. Index-based disaster insurance products are a new approach in disaster insurance, reducing the transaction cost and justifying entry of insurers to develop disaster coverage, even for low-income people.  In this report, MicroSave’s Microinsurance experts, Premasis Mukherjee and Sunil Bhat, study the potential for scaling up index-based disaster insurance for South and South Asian countries. 

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