Under the weather? Uptake of index-based weather insurance in Saint Lucia

Marius Ehrlinspiel
Working Papers

Policymakers have frequently heralded index-based agricultural microinsurance as a panacea to provide farmers in developing countries with insurance against increasingly adverse weather conditions. Looking at the facts, however, tells a different tale: a large majority of smallholders in the Global South remain without a safety net in case disaster strikes.

This study strongly indicates that low-take up rates are not merely a matter of low financial literacy and/or lack of trust, but can also be attributed to the product itself. If adapted wisely, the author finds that index-based microinsurance is nonetheless a promising instrument for climate change adaptation and provides a comprehensive set of policy recommendations.