Barriers to Household Risk Management: Evidence from India

Microinsurance is fast emerging as an important component to comprehensive financial service offerings to the BoP. Recognizing that often the poor fall back into poverty due to financial setbacks caused by illness, accident, death or natural destruction, several organizations are introducing policies that will help mitigate risk better – for example XAC Bank in Mongolia (where the population is nomadic and heavily dependent on the cattle trade), offers farmers livestock insurance.

This paper analyzes the risk mitigation strategies employed among farmers in India. In particular the team at the Institute for Financial Management and Research (IFMR) Center for Microinsurance (CMF), looks at the adoption of rainfall insurance products designed to compensate low-income Indian farmers in case of poor rainfall during the monsoon season. The study compares patterns between Andhra Pradesh and Gujarat, and offers lessons based on their findings.

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