The dynamics of insurance demand under liquidity constraints and insurer default risk
Low demand for micro-insurance has been a prominent problem in developing countries. We study the dynamics of insurance demand by risk-averse farmers who can borrow and lend subject to a credit constraint and who also perceive a risk of insurer default. Credit constraints and the possibility of insu...
| Autores principales: | , |
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| Formato: | Artículo preliminar |
| Lenguaje: | Inglés |
| Publicado: |
International Food Policy Research Institute
2012
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| Materias: | |
| Acceso en línea: | https://hdl.handle.net/10568/153842 |
| _version_ | 1855516900834934784 |
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| author | Liu, Yanyan Myers, Robert J. |
| author_browse | Liu, Yanyan Myers, Robert J. |
| author_facet | Liu, Yanyan Myers, Robert J. |
| author_sort | Liu, Yanyan |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | Low demand for micro-insurance has been a prominent problem in developing countries. We study the dynamics of insurance demand by risk-averse farmers who can borrow and lend subject to a credit constraint and who also perceive a risk of insurer default. Credit constraints and the possibility of insurer default both reduce the demand for insurance. We then propose an alternative insurance design that allows farmers to enter an insurance contract while delaying payment of the premium until the end of the insured period. We show how this alternative design can increase insurance take-up by relaxing the liquidity constraint and assuaging farmers’ concerns about insurer default. We also investigate the effects of the associated problem of farmers reneging on their delayed premium payment if the insured event does not occur. |
| format | Artículo preliminar |
| id | CGSpace153842 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2012 |
| publishDateRange | 2012 |
| publishDateSort | 2012 |
| publisher | International Food Policy Research Institute |
| publisherStr | International Food Policy Research Institute |
| record_format | dspace |
| spelling | CGSpace1538422025-11-06T05:23:22Z The dynamics of insurance demand under liquidity constraints and insurer default risk Liu, Yanyan Myers, Robert J. agricultural insurance insurance liquidity constraint Low demand for micro-insurance has been a prominent problem in developing countries. We study the dynamics of insurance demand by risk-averse farmers who can borrow and lend subject to a credit constraint and who also perceive a risk of insurer default. Credit constraints and the possibility of insurer default both reduce the demand for insurance. We then propose an alternative insurance design that allows farmers to enter an insurance contract while delaying payment of the premium until the end of the insured period. We show how this alternative design can increase insurance take-up by relaxing the liquidity constraint and assuaging farmers’ concerns about insurer default. We also investigate the effects of the associated problem of farmers reneging on their delayed premium payment if the insured event does not occur. 2012 2024-10-01T13:57:57Z 2024-10-01T13:57:57Z Working Paper https://hdl.handle.net/10568/153842 en Open Access application/pdf International Food Policy Research Institute Liu, Yanyan; Myers, Robert J. 2012. The dynamics of insurance demand under liquidity constraints and insurer default risk. IFPRI Discussion Paper 1174. Washington, DC: International Food Policy Research Institute (IFPRI). https://hdl.handle.net/10568/153842 |
| spellingShingle | agricultural insurance insurance liquidity constraint Liu, Yanyan Myers, Robert J. The dynamics of insurance demand under liquidity constraints and insurer default risk |
| title | The dynamics of insurance demand under liquidity constraints and insurer default risk |
| title_full | The dynamics of insurance demand under liquidity constraints and insurer default risk |
| title_fullStr | The dynamics of insurance demand under liquidity constraints and insurer default risk |
| title_full_unstemmed | The dynamics of insurance demand under liquidity constraints and insurer default risk |
| title_short | The dynamics of insurance demand under liquidity constraints and insurer default risk |
| title_sort | dynamics of insurance demand under liquidity constraints and insurer default risk |
| topic | agricultural insurance insurance liquidity constraint |
| url | https://hdl.handle.net/10568/153842 |
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