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...

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Main Authors:	Giné, Xavier, Townsend, Robert, Vickery, James
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ADVERSE SELECTION ADVERSE SELECTION PROBLEMS BALANCE SHEET BUDGETING BUSINESS SCHOOL CAPITAL ALLOCATION CAPITAL STRUCTURE CONTRACT DESIGN CORPORATE FINANCE CORPORATE INVESTMENT CURRENT INCOME DEVELOPING COUNTRIES DISTRIBUTION OF LOSSES DIVERSIFICATION DIVERSIFICATION BENEFITS DIVERSIFIED PORTFOLIO DROUGHT DUMMY VARIABLE ECONOMIC ACTIVITY ECONOMICS EMPLOYMENT EXPOSURE TO RISK EXTERNAL FINANCE FAMILY MEMBERS FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE SYSTEM FINANCIAL INSTITUTION FINANCIAL RISK FINANCIAL SUPPORT FOREIGN REINSURER HOLDING INCOME SHOCKS INFLATION INFLATION RATE INNOVATIONS INSURANCE INSURANCE CONTRACT INSURANCE CONTRACTS INSURANCE COVERAGE INSURANCE DESIGN INSURANCE PAYOUT INSURANCE PAYOUTS INSURANCE POLICIES INSURANCE PREMIUM INSURANCE PREMIUMS INSURANCE PRODUCT INSURER INTERNATIONAL BANK LINE OF CREDIT LIQUID ASSETS LIQUID FUNDS LOCAL FINANCIAL INSTITUTIONS LOWER INCOME MACROECONOMIC DATA MACROECONOMIC RISK MACROECONOMIC VARIABLES MARGINAL UTILITY OF CONSUMPTION MARKET RETURNS MATURITY MICROINSURANCE MORAL HAZARD MUTUAL FUND MUTUAL FUND INVESTORS MUTUAL FUNDS OPTIMAL CONTRACT OUTPUT PORTFOLIO PORTFOLIO EXPOSURES PRECAUTIONARY SAVINGS PRIVATE SECTOR DEVELOPMENT PROBABILITY PRODUCTION RISK PRODUCTIVITY PRODUCTIVITY SHOCK RATE OF RETURN REINSURANCE REMITTANCES RESEARCH ASSISTANCE RISK EXPOSURE RISK FACTORS RISK MANAGEMENT RISK MANAGERS STOCK MARKET STOCK RETURNS TAX TRADING TRANSITORY INCOME TREASURY TREASURY BOND TREASURY BOND YIELD TREASURY YIELD VALUABLE WELFARE BENEFITS
Online Access:	http://documents.worldbank.org/curated/en/2007/12/8828628/statistical-analysis-rainfall-insurance-payouts-southern-india http://hdl.handle.net/10986/7610

id	okr-10986-7610
recordtype	oai_dc
spelling	okr-10986-76102021-04-23T14:02:34Z Statistical Analysis of Rainfall Insurance Payouts in Southern India Giné, Xavier Townsend, Robert Vickery, James ADVERSE SELECTION ADVERSE SELECTION PROBLEMS BALANCE SHEET BUDGETING BUSINESS SCHOOL CAPITAL ALLOCATION CAPITAL STRUCTURE CONTRACT DESIGN CORPORATE FINANCE CORPORATE INVESTMENT CURRENT INCOME DEVELOPING COUNTRIES DISTRIBUTION OF LOSSES DIVERSIFICATION DIVERSIFICATION BENEFITS DIVERSIFIED PORTFOLIO DROUGHT DUMMY VARIABLE ECONOMIC ACTIVITY ECONOMICS EMPLOYMENT EXPOSURE TO RISK EXTERNAL FINANCE FAMILY MEMBERS FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE SYSTEM FINANCIAL INSTITUTION FINANCIAL RISK FINANCIAL SUPPORT FOREIGN REINSURER HOLDING INCOME SHOCKS INFLATION INFLATION RATE INNOVATIONS INSURANCE INSURANCE CONTRACT INSURANCE CONTRACTS INSURANCE COVERAGE INSURANCE DESIGN INSURANCE PAYOUT INSURANCE PAYOUTS INSURANCE POLICIES INSURANCE PREMIUM INSURANCE PREMIUMS INSURANCE PRODUCT INSURER INTERNATIONAL BANK LINE OF CREDIT LIQUID ASSETS LIQUID FUNDS LOCAL FINANCIAL INSTITUTIONS LOWER INCOME MACROECONOMIC DATA MACROECONOMIC RISK MACROECONOMIC VARIABLES MARGINAL UTILITY OF CONSUMPTION MARKET RETURNS MATURITY MICROINSURANCE MORAL HAZARD MUTUAL FUND MUTUAL FUND INVESTORS MUTUAL FUNDS OPTIMAL CONTRACT OUTPUT PORTFOLIO PORTFOLIO EXPOSURES PRECAUTIONARY SAVINGS PRIVATE SECTOR DEVELOPMENT PROBABILITY PRODUCTION RISK PRODUCTIVITY PRODUCTIVITY SHOCK RATE OF RETURN REINSURANCE REMITTANCES RESEARCH ASSISTANCE RISK EXPOSURE RISK FACTORS RISK MANAGEMENT RISK MANAGERS STOCK MARKET STOCK RETURNS TAX TRADING TRANSITORY INCOME TREASURY TREASURY BOND TREASURY BOND YIELD TREASURY YIELD VALUABLE WELFARE BENEFITS 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. 2012-06-08T21:47:10Z 2012-06-08T21:47:10Z 2007-12 http://documents.worldbank.org/curated/en/2007/12/8828628/statistical-analysis-rainfall-insurance-payouts-southern-india http://hdl.handle.net/10986/7610 English Policy Research Working Paper; No. 4426 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research South Asia India
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ADVERSE SELECTION ADVERSE SELECTION PROBLEMS BALANCE SHEET BUDGETING BUSINESS SCHOOL CAPITAL ALLOCATION CAPITAL STRUCTURE CONTRACT DESIGN CORPORATE FINANCE CORPORATE INVESTMENT CURRENT INCOME DEVELOPING COUNTRIES DISTRIBUTION OF LOSSES DIVERSIFICATION DIVERSIFICATION BENEFITS DIVERSIFIED PORTFOLIO DROUGHT DUMMY VARIABLE ECONOMIC ACTIVITY ECONOMICS EMPLOYMENT EXPOSURE TO RISK EXTERNAL FINANCE FAMILY MEMBERS FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE SYSTEM FINANCIAL INSTITUTION FINANCIAL RISK FINANCIAL SUPPORT FOREIGN REINSURER HOLDING INCOME SHOCKS INFLATION INFLATION RATE INNOVATIONS INSURANCE INSURANCE CONTRACT INSURANCE CONTRACTS INSURANCE COVERAGE INSURANCE DESIGN INSURANCE PAYOUT INSURANCE PAYOUTS INSURANCE POLICIES INSURANCE PREMIUM INSURANCE PREMIUMS INSURANCE PRODUCT INSURER INTERNATIONAL BANK LINE OF CREDIT LIQUID ASSETS LIQUID FUNDS LOCAL FINANCIAL INSTITUTIONS LOWER INCOME MACROECONOMIC DATA MACROECONOMIC RISK MACROECONOMIC VARIABLES MARGINAL UTILITY OF CONSUMPTION MARKET RETURNS MATURITY MICROINSURANCE MORAL HAZARD MUTUAL FUND MUTUAL FUND INVESTORS MUTUAL FUNDS OPTIMAL CONTRACT OUTPUT PORTFOLIO PORTFOLIO EXPOSURES PRECAUTIONARY SAVINGS PRIVATE SECTOR DEVELOPMENT PROBABILITY PRODUCTION RISK PRODUCTIVITY PRODUCTIVITY SHOCK RATE OF RETURN REINSURANCE REMITTANCES RESEARCH ASSISTANCE RISK EXPOSURE RISK FACTORS RISK MANAGEMENT RISK MANAGERS STOCK MARKET STOCK RETURNS TAX TRADING TRANSITORY INCOME TREASURY TREASURY BOND TREASURY BOND YIELD TREASURY YIELD VALUABLE WELFARE BENEFITS
spellingShingle	ADVERSE SELECTION ADVERSE SELECTION PROBLEMS BALANCE SHEET BUDGETING BUSINESS SCHOOL CAPITAL ALLOCATION CAPITAL STRUCTURE CONTRACT DESIGN CORPORATE FINANCE CORPORATE INVESTMENT CURRENT INCOME DEVELOPING COUNTRIES DISTRIBUTION OF LOSSES DIVERSIFICATION DIVERSIFICATION BENEFITS DIVERSIFIED PORTFOLIO DROUGHT DUMMY VARIABLE ECONOMIC ACTIVITY ECONOMICS EMPLOYMENT EXPOSURE TO RISK EXTERNAL FINANCE FAMILY MEMBERS FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE SYSTEM FINANCIAL INSTITUTION FINANCIAL RISK FINANCIAL SUPPORT FOREIGN REINSURER HOLDING INCOME SHOCKS INFLATION INFLATION RATE INNOVATIONS INSURANCE INSURANCE CONTRACT INSURANCE CONTRACTS INSURANCE COVERAGE INSURANCE DESIGN INSURANCE PAYOUT INSURANCE PAYOUTS INSURANCE POLICIES INSURANCE PREMIUM INSURANCE PREMIUMS INSURANCE PRODUCT INSURER INTERNATIONAL BANK LINE OF CREDIT LIQUID ASSETS LIQUID FUNDS LOCAL FINANCIAL INSTITUTIONS LOWER INCOME MACROECONOMIC DATA MACROECONOMIC RISK MACROECONOMIC VARIABLES MARGINAL UTILITY OF CONSUMPTION MARKET RETURNS MATURITY MICROINSURANCE MORAL HAZARD MUTUAL FUND MUTUAL FUND INVESTORS MUTUAL FUNDS OPTIMAL CONTRACT OUTPUT PORTFOLIO PORTFOLIO EXPOSURES PRECAUTIONARY SAVINGS PRIVATE SECTOR DEVELOPMENT PROBABILITY PRODUCTION RISK PRODUCTIVITY PRODUCTIVITY SHOCK RATE OF RETURN REINSURANCE REMITTANCES RESEARCH ASSISTANCE RISK EXPOSURE RISK FACTORS RISK MANAGEMENT RISK MANAGERS STOCK MARKET STOCK RETURNS TAX TRADING TRANSITORY INCOME TREASURY TREASURY BOND TREASURY BOND YIELD TREASURY YIELD VALUABLE WELFARE BENEFITS Giné, Xavier Townsend, Robert Vickery, James Statistical Analysis of Rainfall Insurance Payouts in Southern India
geographic_facet	South Asia India
relation	Policy Research Working Paper; No. 4426
description	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.
format	Publications & Research :: Policy Research Working Paper
author	Giné, Xavier Townsend, Robert Vickery, James
author_facet	Giné, Xavier Townsend, Robert Vickery, James
author_sort	Giné, Xavier
title	Statistical Analysis of Rainfall Insurance Payouts in Southern India
title_short	Statistical Analysis of Rainfall Insurance Payouts in Southern India
title_full	Statistical Analysis of Rainfall Insurance Payouts in Southern India
title_fullStr	Statistical Analysis of Rainfall Insurance Payouts in Southern India
title_full_unstemmed	Statistical Analysis of Rainfall Insurance Payouts in Southern India
title_sort	statistical analysis of rainfall insurance payouts in southern india
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2007/12/8828628/statistical-analysis-rainfall-insurance-payouts-southern-india http://hdl.handle.net/10986/7610
_version_	1764402585488326656

Statistical Analysis of Rainfall Insurance Payouts in Southern India

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