Abstract:
The main objective of this study is to explore, from a demand
perspective, the feasibility of an index-based microinsurance
scheme (IBMS) for paddy crop cultivated by small-scale (peasant)
farmers in Sri Lanka to protect them against the production loss
caused by natural disasters. The contingent valuation method (CV)
has been used to elicit the insurance demands (i.e. willingness to
pay) for the hypothetical IBMS. The results show that the interest in
joining IBMS is 88% (SD=2.4%) overall and the strongest influence
factors on farmers' willingness to join are age, total household
expenditure and, awareness of crop insurance. However, willingness
to pay determinantvaries significantly on spatial and insurance
contracts, indicatinga potential for a discriminating and flexible
policy in the insurance scheme. This means that insurance policies
concerning crop insurance product should be designed and
implemented with synergies of different approaches in
microinsurance, rather than as a uniform structure.
