Disaster insurance offers many advantages, particularly when compared to reliance on post-disaster aid, but remains relatively under-used in developing countries. High premiums are often considered as one of the key reasons why uptake remains low, suggesting that those who see disaster insurance as a development priority should consider interventions to reduce the price of insurance, which would increase affordability for households, and ease potential short term fiscal and political constraints for countries.
This report in particular, investigates the effectiveness of premium subsidies as a mechanism for increasing demand for disaster insurance schemes.
The findings are based on:
• a review of the existing evidence in the wider literature, considering both primary and secondary literature in order to illustrate the available evidence and to summarize the latest academic thinking on this topic
• an update of the Compendium of Disaster Risk Transfer schemes in developing countries to provide a snapshot of current application of premium subsidies and to include operational experiences in the investigation
• discussions with insurers, brokers, donor agencies, non-governmental organisations and sovereign risk pool operatives to inform the direction and methods of the study, and to provide expert review input
• a detailed qualitative and quantitative analysis of premium subsidies in comparison to other public intervention options for encouraging uptake of insurance
Vivideconomics; Surminski Consulting; Callund Consulting. Final report: Understanding the role of publicly funded premium subsidies in disaster risk insurance in developing countries. Evidence on Demand, UK (2016) xii, 73p