Editor’s choice
Editor’s choice
This chapter is part of a book which investigates the linkages between disaster risk reduction and microinsurance. SEI contributes with a chapter on microinsurance risk management tool for drought in Ethiopia.
Photo: Torsten Martens / Unsplash.
The term ‘microfinance’ refers to the extension of financial services to poor people who are not considered qualified enough to have access to traditional bank and insurance services.
SEI researchers Jill Dyszynski and Takeshi Takama contributed to the book with a chapter on the development of a microinsurance risk management tool for drought in Ethiopia.
In close partnership with Oxfam America and others, Dyszynski and Takama studied how an index-based microinsurance product design could be used as a risk management tool for drought in Ethiopia.
Their study compared the financial sustainability of both standalone and loan-bundled microinsurance products.
It also included interviews with farmers and potential suppliers in order to assess opportunities and trade-offs with the products.
Overall results from their research indicate that there is still a need to improve the index quality in order to make more stable and robust risk assessments.
Furthermore, considerations of supply and demand side affordability suggest advantages of offering standalone microinsurance products over loan-bundled products, particularly for very low income farmers.
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