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Insurance, Credit and Safety Nets for the Poor in a World of Risk

Published by:
Publication date
28/10/2009
Number of Pages
16
Language:
English
Type of Publication:
Studies
Focus Region:
Global
Focus Topic:
Climate / Weather / Environment
Gender / Youth / Social Inclusion
Rural Finance / Insurance
Commodity:
Crops
Author
Daniel Clarke, Sefan Dercon
Organization
United Nations, Department of Economics and Social Affairs

This paper asks how insurance can be more effectively delivered to the poor, and what its role should be relative to other microfinance programmes, safety nets and informal insurance systems. We focus on the various interactions, including how insurance may crowd out credit and informal insurance, and implications for the design of insurance schemes. We argue that well-designed insurance schemes, building on existing informal systems, and focusing on catastrophic and serious covariate risks, could offer protection against risk and contribute to poverty reduction beyond the combined impact of microcredit programmes, safety nets and existing informal mutual support systems.