Borrowing from the Insurer: An Empirical Analysis of Demand and Impact of Insurance in China - (pdf 1,7 MB)
Yanyan Liu, Kevin Chen, Ruth Hill and Chengwei Xiao
Research paper nº34, July 2013
The study presents results from a randomized control trial in rural China designed to understand whether a change in the timing of the payment of a premium for swine insurance helps overcoming barriers to insurance demand and whether insurance allows farmers to increase investment in activities that expose them to more risk. Findings show that insurance take-up is three times higher among those who were given the option to pay at the end of the insured period; that insurance has a positive impact on investment; and that encouraging insurance purchases can have a positive long run effect on the income and welfare or rural households.
The Impact of Health Insurance Education on Enrollment of Microfinance Institution Clients in the Ghana National Health Insurance Scheme, Northern Region of Ghana - (pdf 1,26 MB)
Elizabeth Schultz, Marcia Metcalfe and Bobbi Gray
Research paper nº33, May 2013
Despite the fact that national health insurance has been available in Ghana since 2003, the coverage is far from universal. This study evaluates a consumer education intervention for microfinance clients by Freedom from Hunger and Sinapi Aba Trust designed to increase awareness, knowledge and eventually take-up rates of the National Health Insurance Scheme. Results suggest that the lack of knowledge may not the most important barrier to enrollment: while health insurance education appeared to increase knowledge of health insurance among those who received it, there were no significant differences in enrollment rates between the treatment groups and control group. Rather, it appears that convenience of registration and timing of premium payments were more common challenges faced by these individuals.
Can Microinsurance Help Prevent Child Labor? An Impact Evaluation from Pakistan - (pdf 1,44 MB)
Andreas Landmann and Markus Frölich
Research paper nº32, May 2013
Child labour is a common consequence of economic shocks in developing countries. This paper explores how reducing vulnerability through insurance impacts child labour and schooling. Using the case of a health and accident insurance scheme by a Pakistani microfinance institution, the study finds that increased insurance coverage results in lower incidence of child labor and reduced earnings from child labour. The effect is largely attributed to an ex-ante feeling of protection as opposed to a shock-mitigation effect.
The Impact of Microinsurance on Asset Accumulation and Human Capital Investments: Evidence from a Drought in Kenya - (pdf 1,89 MB)
Sarah A. Janzen and Michael R. Carter
Research paper nº31, March 2013
Can insurance transfer risk in a way that reduces the need for households to rely on costly coping strategies that undermine their future productivity? That´s the central question this paper aims to answer based on evidence from an index-based drought insurance product available to pastoralists in northern Kenya. Results show that insured households are on average 22-36 percentage points less likely to anticipate drawing down assets and 27-36 percentage points less likely to anticipate reducing meals than their uninsured counterpart. Insurance not only smooths consumption but also improves the ability of recovering after a drought.
What is a Health Card Worth? An Evaluation of an Outpatient Health Insurance Product in Rural India - (pdf 1,25 MB)
Ajay Mahal, Karuna Krishnaswamy, Rupalee Ruchismita and D. Girish Babu
Research paper nº30, February 2013
This paper presents the results of a randomized control trial that evaluated the impact of CARE Foundation´s out-patient insurance cards. The insurance product encouraged more frequent visits to community health workers, leading to earlier identification of illnesses and more timely referrals to a doctor or hospital. Since patients were treated at an earlier stage, they spent fewer days in hospital and costs were lower. In the project, community health workers were trained and deployed in villages to offer preventive care consultations, make referrals to a doctor when needed, and sell outpatient health insurance.
Understanding and Information Failures: Lessons from a Health Microinsurance Program in India - (pdf 769 KB)
Jean-Philippe Platteau and Darwin Ugarte Ontiveros
Research paper nº29, February 2013
This paper attempts to understand the factors underlying the low take up and renewal rates frequently observed in insurance programmes in poor countries. Based on experience in India, the findings suggest that deficient information about the insurance product and the functioning of the scheme, poor understanding of the insurance concept, and the resulting low use of the insurance products by eligible households are some of the main causes of low enrolment and renewal rates.
Smallholder Participation in Hog Insurance and Willingness to Pay for Improved Policies: Evidence from Sichuan Province in China - (pdf 669 KB)
Kevin Chen, Wuyang Hu, Chengwei Xiao and Li Xing
Research paper nº28, January 2013
Using rural household survey data collected from Sichuan province in China, this paper examines contributing factors to farmers' participation and their willingness to pay for improvements to the current insurance policy. The analysis shows that farmer demographic characteristics, the size of their operation, as well as their knowledge about insurance play an important role in farmers' insurance participation decisions. These results provide further insights for improving hog insurance policy design and promoting farmers' participation.
Protection of the microinsurance consumer: Confronting the impact of poverty on contractual relationships - (pdf 1018 KB)
Research paper nº27, December 2012
This paper provides a legal analysis of the contractual vulnerability of microinsurance consumers and studies mechanisms that effectively protect them. While consumer protection is essential to address contractual vulnerability issues, it should be based on a legal framework and should place obligations on states, insurers, reinsurers and intermediaries who participate in the value chain of microinsurance.
The Demand for Micro-Insurance: A Literature Review - (pdf 860 KB)
Ombeline De Bock and Wouter Gelade
Research paper nº26, November 2012
Why are demand and renewal rates for microinsurance so low despite the important protection it may offer? To address the puzzle this paper provides a selective overview of the current state of research on demand for microinsurance. It first looks at the theoretical research and then reviews the empirical evidence on the factors influencing demand for insurance.
Do Caste and Social Interactions Affect Risk Attitudes and Adoption of Microinsurance? Evidence from Rainfall Insurance Adoption in Gujarat, India - (pdf 1,66 MB)
Ashish Singh, Sarthak Gaurav and Thiagu Ranganathan
Research paper nº25, November 2012
The paper looks into the social context within which risk attitudes are formed and participation decisions are made, using microdata from rural households in Gujarat, India. Both caste affiliation and social interaction are found to significantly affect the risk attitudes of farmers. Furthermore, social interaction seems to have a significant influence on the adoption of rainfall insurance.
The Impact of a Health Insurance Programme: Evidence from a Randomized Controlled Trial in Kenya - (pdf 1,28 MB)
Stefan Dercon, Jan Willem Gunning, Andrew Zeitlin and Simone Lombardini
Research paper nº24, November 2012
This study evaluates the impact of introducing a new health insurance product in rural Kenya. Health insurance was found to reduce net health expenditure and informal borrowing for medical costs, and to increase non-food and overall consumption. However, the study observed no significant differences in health outcomes between the control and treatment groups.
Demand for the product proved sensitive to price discounts, but not to training in financial and risk literacy. The main determinants of renewal were positive or negative experiences, rather than hospital use or price.
Agricultural Decisions after Relaxing Credit and Risk Constraints - (pdf 2,1 MB)
Dean Karlan, Robert Osei, Isaac Osei Akoto and Christopher Udry
Research paper nº23, October 2012
This paper examines how uninsured risk constrains farmers in Northern Ghana. It shows that when provided with insurance against the primary catastrophic risk they face, farmers are able to increase expenditure on their farms and make riskier choices. The study finds a strong demand for insurance among these farmers. Insurance payouts further increase this demand in subsequent years both among recipients and among their social networks.
The social dilemma of microinsurance: A framed field experiment
on free-riding and coordination in microcredit groups - (pdf 1,4 MB)
Wendy Janssens and Berber Kramer
Research paper nº22, August 2012
This paper analyses free-riding and coordination problems in health microinsurance in Tanzania. Microinsurance games played with microcredit clients confirm that less risk averse clients are tempted to free-ride and forgo individual insurance and demonstrate limited coordination failures under individual insurance. Group insurance increases demand in the games. These findings provide a potential solution for low uptake of microinsurance.
Weather index-based insurance in a cash crop regulated sector: Ex ante evaluation for cotton producers in Cameroon - (pdf 1,78 MB)
Antoine Leblois, Philippe Quirion and Benjamin Sultan
Research paper nº21, August 2012
This study assesses the risk mitigation capacity of weather index-based insurance for cotton growers in Northern Cameroon. It finds that weather index-based insurance is associated with huge basis risk and thus has limited potential for income smoothing. The authors use a tractable definition of basis risk to show that calibrating parameters in sub-regions allows to reduce dramatically basis risk and to avoid non negligible balancing out between distinct geographical zones.
Impact des mutuelles de santé sur les comportements de demande de santé des ménages au Cameroun - (pdf 845 KB)
Jean Colbert Awomo Ndongo and Roger Tsafack Nanfosso
Research paper nº20, May 2012
This study examines the impact of micro health insurance on the demand for health care based on a representative survey of 317 households in the Health District in Mbalmayo central region in Cameroon. Authors show that evaluated schemes are plagued by adverse selection, which questions the impact of the membership in health mutuals on health care utilization.
Microinsurance decisions: Evidence from Ethiopia - (pdf 1,98 MB)
Daniel Clarke and Gautam Kalani
Research paper nº19, May 2012
This study reviews evidence collected from a microinsurance field experiment in rural Ethiopia. The experiment involves collecting data from individuals in order to predict the shape of the demand curve for indexed insurance. The study finds that the relationship between demand for index insurance and wealth levels is none linear and that individuals with intermediate levels of wealth have the highest demand while the richest and the poorest exhibited much lower demand. This observed demand curve is then compared with demand curves that have been generated using different economic theories regarding how people make economic decisions.
Client-value of microinsurance products: Evidence from the Mutual Assistance Fund in Vietnam - (pdf 899 KB)
Son Hong Nghiem and An Hoai Duong
Research paper nº18, May 2012
This paper investigates the preferences of clients and determinants of demand for microinsurance products with the case study of the Mutual Assistance Fund (MAF), the pioneer microinsurance provider in Vietnam. The results reveal that the current premium offered by MAF seems too low and that is has no significant effect to the preferences of clients over product attributes. It is also found that clients are willing to pay higher premiums in order to receive a higher level of benefit. In addition, the main factors that are significantly affecting product preferences are previous experience with insurance, mathematical ability and attitude towards risk.
Weather insured savings accounts - (pdf 1,19 MB)
Daniel Stein and Jeremy Tobacman
Research paper nº17, March 2012
This paper uses a laboratory experiment in Gujarat, India to assess consumers' relative valuations of savings versus insurance when planning for risky rainfall. This is done in an attempt to measure potential demand for a new type of financial product that combines savings and rainfall insurance, a Weather Insured Savings Account (WISA). Experiments reveal that many participants prefer pure insurance or pure savings to any mixture of the two, and that this preference is most pronounced among those who are more risk averse. The results suggest that the introduction of a WISA is unlikely to be successful and mixed saving, insurance products require further investigation.
Impact of education on the willingness to pay for and knowledge of health insurance -
(pdf 1,41 MB)
Jahangir A. M. Khan
Research paper nº16, March 2012
This paper assesses the impact of educational intervention on knowledge, attitude and willingness-to-pay for health insurance using occupational solidarity. It also explores the views of relevant actors on occupational solidarity-based health insurance. Based on multiple regression analysis and experimental design, the combined results of the experiments indicate that the educational intervention has improved the knowledge and willingness to pay for health insurance among informal sector workers in Bangladesh.
Health worker preferences for community-based health Insurance payment mechanisms:
a discrete choice experiment - (pdf 1,1 MB)
Paul Jacob Robyn, Till Bärnighausen, Aurélia Souares, Germain Savadogo, Brice Bicaba, Ali Sié and Rainer Sauerborn
Research paper nº15, February 2012
Two important challenges in establishing and sustaining community-based insurance (CBI) schemes are low rates of community member enrollment and high lapse rates. These factors lead to low CBI coverage which in turn results in low levels of revenue for the risk carrier and limited risk-pooling, which leave CBI schemes financially and organizationally vulnerable to unexpected changes in incomes or high disease incidence. In this paper an experimental design is used to examine how the relationship between insurance providers and health care facilities - and more specifically payment mechanisms for services delivered by health workers - can influence uptake and renewals. The research discovers that the way health care workers are remunerated by the risk carrier can crucially determine CBI performance and quality of health services as payment mechanisms also influence the way healthcare is delivered. Based on the results from this experiment, a revised CBI payment system based on health workers preferences was introduced in the Nouna district of Burkina Faso in January 2011.
Is it all about money? A randomized evaluation of the impact of insurance literacy and marketing treatments on the demand for health microinsurance in Senegal -
(pdf 1,56 MB)
Jacopo Bonan, Olivier Dagnelie, Philippe LeMay-Boucher and Michel Tenikue
Research paper nº14, February 2012
In Senegal mutual health organizations (MHOs) have been present in the greater region of Thies for years. Despite their efforts and the benefits they bring to low-income population, in some areas, take up rates remain low. The authors of this paper ran an insurance literacy module, communicating the benefits of health microinsurance and explaining MHOs work, to a randomly selected sample of households in the city of Thies. The effects of the training, and three vouchers offering refunds and additional education were evaluated using a randomized control trial. The authors find that the insurance literacy module had no impact on the demand for health microinsurance, but that their marketing intervention had a significant effect on the take up decisions of households.
Risk preferences and demand for insurance under price uncertainty:
an experimental approach for cocoa farmers in Côte d'ivoire -
(pdf 1,37 MB)
Euphrasie B.H. Kouame, Aka Narcisse Komenan
Research paper nº13, January 2012
This paper analyses the willingness to pay of Côte d'Ivoire cocoa farmers for very affordable insurance and in which extent risk aversion determines demand. The methodology employed is an experimental gambling approach with real pay-offs and a
contingent valuation method to measure the farmers willingness to pay for the insurance. The findings reveal a relatively high level of risk aversion among Ivorian cocoa farmers with more than 45 percent of the households exhibiting severe to extreme risk aversion. Considerable interest in minimum price insurance has been found with 66 percent of farmers responding positively to the interest question.
It appears that farmers' demand for insurance is affected by a range of independent variables like household size, farming experience, monetary value of livestock, share of cocoa in total income, age of cocoa farm, farm size and social network as coping mechanism. More importantly, the study discovers a highly significant effect of risk aversion on farmers' insurance take-up decisions. In particular, high risk aversion was unexpectedly found to inhibit the demand for insurance. Finally, the analysis reveals that the actual premium farmers would actually be willing to pay to be covered is relatively low in spite of a large percentage of farmers stating their interest in the product.
Does microcredit increase child labour in absence of micro insurance? -
(pdf 1,39 MB)
Dr Sayan Chakrabarty
Research paper nº12, February 2012
This paper looks into whether access to microinsurance makes any difference in reducing child labour. The research compares three groups of households: those with no microcredit or microinsurance, those with microcredit but no microinsurance and those households with both microinsurance and microcredit. The study finds that in the case of extremely poor households with health microinsurance and/or life microinsurance in combination with microcredit, microinsurance has a significant effect on reducing child labour. However, it is also found that credit-life insurance has no significant influence. The practical policy consideration stemming from this research is that providing microcredit to extremely poor households is not enough to negate the use of child labour, however microcredit in combination with certain types of microinsurance can have a positive impact on reducing child labour.
Does microinsurance help the poor? Evidence from the targeted health microinsurance program in 2004-2008 -
(pdf 1,15 MB)
Tra T.T. Pham and Thong L. Pham
Research paper nº11, February 2012
This paper evaluates the Health Care Fund for the Poor (HCFP), a scheme that was initiated in Vietnam in 2003. The paper shows that, participation in the HCFP program reduced the out-of-pocket health care expenditure of poor participants, increased the intensity with which the poor sought health care and regular check-ups in public health facilities. The paper also reveals that the HCFP helped reduce the incidence of catastrophic spending when dealing with adverse health events. The paper addresses the possible selection bias of insurance participation by means of fixed-effects models and an instrument variable method within fixed-effects.
Health insurance participation: Evidence from Kenya -
(pdf 1 MB)
Stefan Dercon, Jan Willem Gunning, Andrew Zeitlin, Claudia Cerrone and Simone Lombardini
Research paper nº10, January 2012
This paper describes the main findings of a field experiment offering health insurance to tea farmers in Kenya. Insurance demand increases substantially when price discount is offered, but contrary to expectations, the education campaign did not have any significant effect on insurance demand despite the evidence of improved insurance literacy among participants. Also referral incentives had a negative influence on insurance demand which suggests that trust is an important element to promote insurance uptake. Additionally, reduction in price impacts significantly insurance demand, a lesson to be considered when pricing microinsurance products.
Ciblage des Pauvres dans le Financement Communautaire de Santé au Cameroun (in French) -
(pdf 1,33 MB)
Fondo Sikod and Ibrahim Abba (The Universtity of Yaounde II)
Research paper nº9, October 2011
This study evaluates the degree to which the poor have been targeted by community-based health insurance institutions in Cameroon. With the use of a logistical regression model, and the contingent evaluation method, data collected from three regions in Cameroon show that 90 percent of those who benefit from community health care financing, and having used a formal health care unit, fall within the first two revenue quintiles of the poorest. Also, this study found that annual contributions of approximately 7,000-9,000 francs CFA, would allow more people to participate, and thus increase the penetration of the system into the target population.
Social Networks and Insurance Take-Up: Evidence from a Randomized Experiment in China -
(pdf 1,31 MB)
Jing Cai, Alain de Janvry and Elisabeth Sadoulet (University of California and Berkeley)
Research paper nº8, October 2011
This paper estimates the role of information in insurance take-up using data from a randomized experiment in rural China where information was either offered directly through financial education or accessed indirectly through social networks. Unlike previous studies, the experimental design allows to not only identify the causal effect of social networks, but also to differentiate the various channels through which they operate, including improvement of negotiating power, imitation, and social learning of insurance benefits. The results show that social networks have a large and significant effect on insurance take-up decisions mainly driven by the social learning of insurance benefits. The policy implication is that offering financial education to a subset of households in a village community selected for their strong friendship links with others, their recognized farming skills, and leadership roles, and relying on social networks to extend its effect on more farmers through social learning, is an effective way of improving insurance take-up.
Establishing an Index Insurance Triggers for Crop Loss in Northern Ghana -
(pdf 1,47 MB)
The Katie School of Insurance
Research paper nº7, September 2011
As a consequence of climate change, agriculture in many parts of the world has become a riskier business activity. Given the dependence on agriculture in developing countries, this increased risk has a potentially dramatic effect on the lives of people throughout the developing world especially as it relates to their financial inclusion and sustainable access to capital. This study analyse the relationships between rainfall per crop gestation period and crop yields and studies the likelihood of crop yield losses. It makes recommendations on how this information could be used to develop a trigger for index insurance to help mitigate the financial risks to farmers and lenders who make loans to farmers in Ghana. The paper concludes by describing limitations and challenges that must be overcome in order to develop such risk management tools and by describing the potential for crop loss index insurance based on area crop yield in northern Ghana.
Comprehensive Risk Cover through Remote Sensing Techniques in Agriculture Insurance for Developing Countries: A Pilot Project -
(pdf 2,13 MB)
Mangesh Patankar (CIRM)
Research paper nº6, August 2011
The paper observes the feasibility of implementing area yield insurance and weather insurance schemes for transferring financial risk and managing production risks. The objective included developing a composite insurance product based on normalized difference vegetation index (NDVI) and weather indices via a participatory approach; testing the yield loss estimation accuracy of such a product; and understanding people`s perceptions about the performance of the product. A relationship was found between the uptake of insurance and being above poverty line, subject to the buyer having heard about the insurer earlier, expecting a bad cropping season ahead, and having a close friend who has availed of the insurance scheme.
Microinsurance Utilization in Nicaragua: A Report on the Effects on Children, Retention, and Health Claims -
(pdf 1,25 MB)
Anne Fitzpatrick (University of Michigan), Barbara Magnoni (EA Consultants) and Rebecca L. Thorton (University of Michigan)
Research paper nº5, July 2011
The aim of the study was to extend analysis on a randomized evaluation of voluntary health insurance in Managua, Nicaragua. The paper presents evidence that this insurance product did not increase wasteful consumption: children who were insured but not sick at the beginning of the study reported fewer visits to all providers than those who were uninsured but not sick. Importantly, this insurance product did result in some targeting towards less healthy children, as those who were sick at the beginning of the study reported significantly more visits to all providers, including covered providers. The researchers also present retention results where they find that only 6 percent of those insured were retained 18 months after subsidies were no longer available. Lastly, they present some descriptive statistics of diagnoses at health centers and costs to discuss the implications of the main burdens of disease.
Microinsurance Product Design: Consumer Preferences in Kenya -
(pdf 1,19 MB)
Job Harms (VU University Amsterdam)
Research paper nº4, June 2011
This paper presents a survey-based study on preferences for microinsurance products in rural Kenya. More specifically, the study examines preferences for deductibles and rebates. Like consumers in developed countries, the majority of the respondents in this study have a preference for policies without deductibles and for policies with rebates. Risk aversion, financial literacy, health shocks, economic activities and prior experience with insurance affect these preferences. The results of the study suggest that higher uptake of microinsurance might be achieved by taking these preferences and their determinants into account in the design of microinsurance products.
The Economic Value of the Willingness to Pay for a Community-Based Prepayment Scheme in Rural Cameroon -
(pdf 1,03 MB)
Hermann Pythagore Pierre Donfouet (University of Yaounde II) and Ephias M. Makaudze (University of Western Cape)
Research paper nº3, May 2011
While limited access to health care in rural areas of Cameroon may be attributed to an inability to pay out-of-pocket costs for health care services, a Community-based prepayment scheme specifically designed to overcome this barrier and increase access to health care has received limited take-up among rural households in Cameroon. This study, led by researchers at the University of Yaounde II and the University of Western Cape, seeks to assess the economic value of a community-based prepayment health care system in Cameroon. The researchers use a willingness-to-pay approach based on the contingent valuation method. The results indicate that rural households are willing to pay on average FCFA 1010 or $2.15/person/month and further suggest that there is great demand for a community health care prepayment scheme in rural Cameroon.
Health Care Utilization in Rural Senegal: The Facts Before the Extension of Health Insurance to Farmers -
(pdf 1,54 MB)
Aurélia Lépine (University of Otago) and Alexis Le Nestour (University of Otago)
Research paper nº2, April 2011
The aim of this study conducted by researchers at the University of Otago is to analyze the determinants of the use of curative care from qualified workers in Senegal, an area where 94% of the population does not have health insurance coverage. While most studies focus on characteristics of the demand for health care, this study also examines characteristics of the closest facility to analyze the impact of accessibility in addition to price and quality of medical services on health-seeking behaviour. The study reveals that household economic status, price, and quality of care are important determinants of the likelihood of seeking treatment from a qualified provider.
Marketing Complex Financial Products in Emerging Markets: Evidence from Rainfall Insurance in India -
(pdf 1,04 MB)
Shawn Cole (Harvard Business School), Sarthak Gaurav (IGIDR), Jeremy Tobacman (Wharton School)
Research paper nº1, April 2011
In this study, researchers from Harvard Business School, IGIDR and Wharton School conducted a field experiment in which rainfall insurance, a financial derivative for managing rainfall risk in agriculture whose payouts are linked to the amount of rainfall measured at a designated station, was offered to 600 farmers in India. A customized financial literacy and insurance education module communicating the need for personal financial management and formal hedging of yield risks was offered to randomly selected farmers. The effect of the financial literacy training and six marketing treatments are evaluated using a randomized control trial. The study provides some of the first evidence that financial education can influence financial behaviour. Results also reveal extremely low financial awareness, cognitive limitations and poor comprehension of rainfall insurance among the farmers being studied.