Can weather index insurance be a win for all?

Developing countries are already enduring the worst of climate change. Floods and droughts are impacting natural resources and water availability, and vulnerable smallholder farmers with limited access to government support and lower capacity to adapt to these climatic events face extreme risk.

Weather Index Insurance (WII) may increase the ability of these vulnerable farmers to face climate shocks. Using mainly satellite images to help predict damage and assess losses, WII facilitates faster compensation payouts for farmers. Advances in technology and digital innovations help avoid the pitfalls of high transaction costs and therefore expand the potential reach of insurance coverage to remote areas previously considered uninsurable. But such programs still struggle to attract the clients most in need of protection. Why?

Image credit: Sanjiv de Silva/IWMI