Index-based insurance is an innovative financial product that has been introduced in recent years in countries as diverse as India, Malawi, Mongolia, and Thailand. It allows individual smallholder farmers to hedge against agricultural production risks, such as droughts or floods. The product pays out in events that are triggered by a publicly observable index, such as rainfall recorded on a local rain gauge. As a result, advocates argue that payouts can be calculated and disbursed quickly and automatically without the need for households to formally file a claim.

Innovations in Insuring the Poor

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