What is it about?

The paper investigates how covariant shocks influence the willingness-to-pay (price that a person is willing to pay) of potential policy holders of an index-based insurance product. The key starting point is that Index-based insurance is itself meant to cover covariant risks. The sample consists of Ethiopian farmers and the insurance product covers livestock mortality risk.

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Why is it important?

The papers contribute to the debate about the demand of index-based insurance that most of the time is low and volatile. We argue that the high demand volatiltiy can also be explained by farmer's recent experience with covariant shocks.

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This page is a summary of: Does willingness-to-pay for weather index-based insurance follow covariant shocks?, The International Journal of Bank Marketing, May 2017, Emerald,
DOI: 10.1108/ijbm-10-2016-0155.
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