Publication Details

Category Text Publication
Reference Category Journals
DOI 10.1177/1070496512442505
Title (Primary) The role of microinsurance as a safety net against environmental risks in Bangladesh
Author Akter, S.
Source Titel Journal of Environment & Development
Year 2012
Department OEKON
Volume 21
Issue 2
Page From 263
Page To 280
Language englisch
Keywords Bangladesh; microinsurance; xlimate change adaptation; natural Hazard; index-insurance

The Intergovernmental Panel on Climate Change (IPCC) identifies Bangladesh as one of the countries that will be hardest hit by the anticipated effects of climate change. The poorest people are the most vulnerable, as they do not have sufficient means to cope with environmental risks. In the absence of effective safety nets, poor people become trapped in chronic poverty due to the recurrent damage caused by natural disasters. Recently, there has been growing optimism among policy makers and practitioners about the role of microinsurance as a safety net against weather risks for the poorest and most vulnerable people of Bangladesh. This article sheds light on this issue by synthesizing the findings of half a decade of research on the prospects of weather microinsurance in Bangladesh. Three key conclusions are drawn from the synthesis. First, the market for a standard, stand-alone weather microinsurance in Bangladesh is characterized by low demand, poor governance, and lack of prospects for commercial viability. Second, although the index-based flood insurance model has theoretical appeal (i.e., no moral hazard or adverse selection and low transaction cost), high economic cost might be associated with its highly complex practical implementation. Finally, the current (un)regulatory arrangement of microinsurance supply in Bangladesh, which does not guarantee accountability and protect clients’ rights, is likely to increase rather than decrease poor people’s vulnerability. The study makes two key recommendations: (1) exploring options for nontraditional insurance models (e.g., group-based and ex-post premium-based models), and (2) considering regulatory reforms to ensure good governance and to foster market efficiency through low-cost delivery and product innovation.

Persistent UFZ Identifier
Akter, S. (2012):
The role of microinsurance as a safety net against environmental risks in Bangladesh
J. Env. Dev. 21 (2), 263 - 280 10.1177/1070496512442505