| Assessing Index-Based Weather Insurance Feasibility |
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The Commodity Risk Management Group wanted to evaluate the commercial and technical feasibility of introducing an index-based weather insurance product in Cambodia, that would help farmers and other value chain participants transfer the substantial risks associated with flooding and drought to international markets. This innovative approach potentially mitigates many of the challenges of traditional insurance in low-income contexts, such as those driven by asymmetric information and the high transaction costs of loss adjustment. Our feasibility study assessed both supply and demand aspects of the potential market, and included: (1) a review of the regulatory and legal environment for micro-insurance; (2) a demand survey among agribusinesses and both organised and independent farmers; (3) comparative assessment of delivery mechanisms as well as facilitation of domestic insurance and distribution partners, and; (4) assessment of the quality of rainfall and flood measurement devices and data collection capabilities. EMC found that index-based weather insurance was in fact possible from a market perspective but identified implementation constraints with regards to meteorological data collection quality. While not yet implemented in Cambodia, the plan remains a feasible option for policy makers seeking to protect farmers from weather-based risk and is being further considered by other development partners. The project findings served as a basis for a publication in the French journal “Autrepart” edited by the Institut de Recherche pour le Développement. |
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Provincial Investment Profiles. EMC has been contracted by DAI to produce Investment Profiles for six Cambodian provinces for the USAID Cambodia MSME Project. This follows the success of profiles EMC produced in 2008 for six other provinces. The first six profiles can be accessed here. |
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What We Do Case Studies Assessing Index-Based Weather Insurance Feasibility