Rainfall index insurance provides a payout based on measured local rainfall
during key phases of the agricultural season, and in principle can help rural
households diversify a key source of idiosyncratic risk.
This paper describes
basic features of rainfall insurance contracts offered in India since 2003, and
documents stylized facts about market demand and the distribution of payouts.
The authors summarize the results of previous research on this market, which
provides evidence that price, liquidity constraints, and trust all present
significant barriers to increased take-up.
They also discuss potential future
prospects for rainfall insurance and other index insurance products.
World Bank.Author: Gine,Xavier;Menand,Lev;Townsend, Robert;Vickery, James.Document Date: 2010/10/01.Document Type: Policy Research Working Paper.Report Number: WPS5459.Volume No: 1 of 1
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