The Potential for Scale and Sustainability in Weather Index Insurance
The Potential for Scale and Sustainability in Weather Index Insurance
The Potential for Scale and Sustainability in Weather Index Insurance
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THE POTENTIAL FOR SCALE AND SUSTAINABILITY IN WEATHER INDEX INSURANCE<br />
FOR AGRICULTURE AND RURAL LIVELIHOODS<br />
global market. <strong>The</strong> need to go to this market could <strong>in</strong>itially be reduced if <strong>in</strong>ternational<br />
development banks or others <strong>in</strong> the capital markets provide governments with<br />
cont<strong>in</strong>gency loan measures. In this way, a pool<strong>in</strong>g arrangement or the government<br />
would have sufficient capital to pay all losses if it experiences a bad year. While this<br />
arrangement raises concerns about the crowd<strong>in</strong>g out of private re<strong>in</strong>surers, it could be<br />
especially valuable dur<strong>in</strong>g the early years of an <strong>in</strong>surance programme, until an<br />
adequate reserve has been built up.<br />
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