New Insurance Study Results Reported from Georgia State University (Risk, Informal Institutions, and Index Insurance): Insurance

2022 JUN 13 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- New research on Insurance is the subject of a report. According to news reporting originating from Atlanta, Georgia, by NewsRx correspondents, research stated, “The question of how informal institutions interact with formal markets is a central economic question, particularly in developing countries. We analyze this issue for the demand of an innovative weather insurance product.”

Our news editors obtained a quote from the research from Georgia State University, “Specifically, when does informal risk-sharing act as barrier or support to the take-up of index-based insurance? The presence of an individual in a risk-sharing arrangement reduces her risk aversion, termed ‘Effective Risk Aversion’- a sufficient statistic for index decision making. Our analysis establishes that such reduction in risk aversion can lead to either reduced or increased take up of index insurance. These results provide alternative explanations for two empirical puzzles: unexpectedly low takeup for index insurance and demand being particularly low for the most risk averse.”

According to the news editors, the research concluded: “From a policy perspective, our results highlight how the combination of premium subsidies and informal networks might promote take-up and how this might eventually facilitate better protection against weather risks.”

This research has been peer-reviewed.

For more information on this research see: Risk, Informal Institutions, and Index Insurance. Journal of Environmental Economics and Management, 2022;113:102635. Journal of Environmental Economics and Management can be contacted at: Academic Press Inc Elsevier Science, 525 B St, Ste 1900, San Diego, CA 92101-4495, USA. (Elsevier - www.elsevier.com; Journal of Environmental Economics and Management - http://www.journals.elsevier.com/journal-of-environmental-economics-and-management/)

The news editors report that additional information may be obtained by contacting Francis Annan, Georgia State University, Atlanta, GA 30303, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.jeem.2022.102635. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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