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State of Knowledge Report: Data Requirements for the Design of Weather Index Insurance: Innovation in Catastrophic Weather Insurance to Improve the Livelihoods of Rural Households

Published by:
Document
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Publication date
30/06/2010
Number of Pages
32
Language:
English
Type of Publication:
Studies
Focus Region:
Global
Focus Topic:
Climate / Weather / Environment
Type of Risk:
Market-related
Type of Risk Managment Option:
Risk reduction/mitigation
Commodity:
Crops
Author
Benjamin Collier, Barry Barnett, and Jerry Skees
Organization
GlobalAgRisk, Inc.

In recent years, weather index insurance has gained significant international attention. Multilateral agencies and donors are supporting the development of index insurance products and practitioners are venturing into this work for the first time. However, designing index insurance products is quite challenging and requires strong analytics, significant research, access to sufficient quantities of relevant data, capacity building among local stakeholders, legal and regulatory expertise, etc. Based on experiences to date, some questioning has begun about the scalability and sustainability of weather index insurance — in some cases, these questions are motivated by beliefs that data limitations may cause significant geographic constraints to offering weather index insurance, and in other cases, that the potential of current index insurance models on poverty reduction is doubtful. Thus, the theory and implementation of index insurance is at somewhat of a crossroads. In recognition of these emerging questions, this is the first of several documents that describes the current state of knowledge on key aspects of index insurance. This State of Knowledge Report (SKR) is on the data component of developing weather index insurance.