CUSTOMIZED INSURANCE FOR FARMERS IN BANGLADESH

Rice field in Bangladesh; Source: flickr (IFPRI Images)

Farmers in rural Bangladesh have limited ability to cope with risks such as flood, drought, injury, or illness. A recent IFPRI discussion paper on, The value of customized insurance for farmers in rural Bangladesh, investigates which financial instruments farmers prefer in order to understand whether insurance or savings—or a combination of the two—is more likely to address farmers’ needs.

Farmers are equally interested in insurance to protect them against health-related risks (e.g. life and disability insurance) and insurance for agricultural-related shocks such as drought, river inundation and pests. As expected, reducing the premium of one insurance product increases its uptake. Farmers seem to prefer investing in multiple types of insurance products, even when they have the option to contribute to a (flexible) group savings account, which provides support to members who experience a wider range of calamities. As a final note, farmers’ choices do not significantly change when they are decided at the individual or group level.