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2014
- handle: 10670/1.v1gntp
- halshs: halshs-00879617
Mots-clés
Producer groups Weather insurance Group insurance D - Microeconomics/D.D1 - Household Behavior and Family Economics/D.D1.D14 - Household Saving; Personal Finance D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D81 - Criteria for Decision-Making under Risk and Uncertainty G - Financial Economics/G.G2 - Financial Institutions and Services/G.G2.G22 - Insurance • Insurance Companies • Actuarial StudiesSujets proches
Assurance (Insurance) Coverage, Insurance Insurance protection Insurance coverage Insurance industry Indemnity insurance Mutual insurance UnderwritingCiter ce document
Vianney Dequiedt et al., « The demand for insurance against common shocks », HALSHS : archive ouverte en Sciences de l’Homme et de la Société, ID : 10670/1.v1gntp
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Résumé
In recent years, index-based insurance has been offered to smallholder farmers in the developingworld to protect against common shocks such as weather shocks. Despite their attractive properties, these products have met with low demand. We consider the frequent situation where farmers are members of groups with common interests. We show that this creates strategic interactions among group members in deciding to insure that reduce the demand for insurance for two reasons. One is free riding due to positive externalities on other group members when a member chooses to insure. The other is potential coordination failure because it may not be profitable for a risk-averse member to insure if the other members do not. As a consequence, we argue that the demand for insurance against common shocks could increase if the insurance policywere sold to groups rather than to individuals.