Index-Based Microinsurance for Paddy Sector in Sri Lanka An Evaluation of Demand Behavior

Abstract

The objective of this study is to support the making of a more efficient and realistic pricing policy for Index-Based Microinsurance Scheme (IBMS) by analyzing, using the contingent valuation method, the insurance demands (i.e. willingness to pay) of the paddy farmers in Sri Lanka. The results show that farmer‟s demand is substantially high and determinants are highly location specific; hence indicating a potential discriminating and flexible policy in the insurance scheme. It means that insurance policy concerning crop insurance product should be designed and implemented with synergies of different approach in micro-insurance rather than a uniform structure.