Weather Index Insurance in Sub-Saharan Africa

Abstract

The recent emergence of weather index insurance offers a promising new risk management tool for African smallholder farmers. Providing a nontechnical introduction to insurance economics, this paper reviews the challenges faced by the pioneers of agricultural weather index insurance. The greatest challenges remain the construction of weather indices with low basis risk and the education of insurance professionals who can advance agricultural microinsurance in Africa.

Keywords: weather index insurance, crop insurance, rural economic development