Abstract

http://ssrn.com/abstract=1062408
 
 

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Statistical Analysis of Rainfall Insurance Payouts in Southern India


Xavier Giné


World Bank - Development Research Group (DECRG)

Robert M. Townsend


MIT - Department of Economics

James I. Vickery


Federal Reserve Bank of New York

December 1, 2007

World Bank Policy Research Working Paper No. 4426

Abstract:     
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.

Number of Pages in PDF File: 20

Keywords: Debt Markets, Deposit Insurance, Labor Policies, Emerging Markets

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Date posted: December 10, 2007  

Suggested Citation

Giné, Xavier and Townsend, Robert M. and Vickery, James I., Statistical Analysis of Rainfall Insurance Payouts in Southern India (December 1, 2007). World Bank Policy Research Working Paper No. 4426. Available at SSRN: http://ssrn.com/abstract=1062408

Contact Information

Xavier Gine
World Bank - Development Research Group (DECRG) ( email )
1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
HOME PAGE: https://sites.google.com/site/decrgxaviergine/
Robert M. Townsend
MIT - Department of Economics ( email )
Bldg. E52-252c
50 Memorial Drive
Cambridge, MA 02142
United States
617-452-3722 (Phone)
617-253-1330 (Fax)
James Ian Vickery (Contact Author)
Federal Reserve Bank of New York ( email )
33 Liberty Street
New York, NY 10045
United States
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