Statistical Analysis of Rainfall Insurance Payouts in Southern India
Using 40 years of historical rainfall data, this paper estimates a distribution for payouts on rainfall insurance policies offered to farmers in the State of Andhra Pradesh, India, in 2006. The authors find that the contracts primarily protect hous...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2007/12/8828628/statistical-analysis-rainfall-insurance-payouts-southern-india http://hdl.handle.net/10986/7610 |
| Summary: | Using 40 years of historical rainfall
data, this paper estimates a distribution for payouts on
rainfall insurance policies offered to farmers in the State
of Andhra Pradesh, India, in 2006. The authors find that the
contracts primarily protect households against extreme tail
events; half the expected value of indemnities paid by the
insurance are generated by only 2 percent of rainfall
realizations. Contract payouts are significantly correlated
cross-sectionally, and also inversely associated with real
GDP growth. The paper discusses the implications of these
findings for the potential benefits of insurance to
households, the risks facing a financial institution
underwriting rainfall insurance contracts, and pricing. |
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