A Minimum Quality Standard (MQS) to Ensure Index Insurance Contracts Do No Harm
Feed the Future Innovation Lab for Markets, Risk and Resilience
Risk management and resilience are becoming a focus for how to support and empower agricultural households who are vulnerable to weather-related shocks. Index insurance has shown tremendous promise where conventional agricultural insurance is not possible or cost-effective, but this promise can only be reached with high-quality contracts that genuinely protect households.
Risk management and resilience are becoming a focus for how to support and empower agricultural households who are vulnerable to weather-related shocks. Index insurance has shown tremendous promise where conventional agricultural insurance is not possible or cost-effective, but this promise can only be reached with high-quality contracts that genuinely protect households.
Currently, the quality of index insurance products is unregulated. Households have no way to tell whether a contract will leave them worse off than having no insurance at all. Standard economic and statistical tools make it possible to establish a Minimum Quality Standard (MQS) to secure vulnerable households and to safeguard markets for future higher-quality contracts.
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