Will Urban Migrants Formally Insure Their Rural Relatives? Family Networks and Rainfall Index Insurance in Burkina Faso

35 Pages Posted: 6 Jun 2018

See all articles by Harounan Kazianga

Harounan Kazianga

Oklahoma State University - Stillwater

Zaki Wahhaj

University of Kent - Department of Economics; University of Namur; University of Kent - School of Economics

Date Written: March 2018

Abstract

We present findings from a pilot study exploring whether and how existing ties between urban migrants and rural farmers may be used to provide the latter improved access to formal insurance. Urban migrants in Ouagadougou (the capital of Burkina Faso) originating from nearby villages were offered, at the prevailing market price, a rainfall index insurance product that can potentially protect their rural relatives from adverse weather shocks. The product had an uptake of 22% during the two-week subscription window. Uptake rates were higher by 17-22 ppts among urban migrants who were randomly offered an insurance policy that would make pay-outs directly to the intended beneficiary rather than the subscriber. We argue that rainfall index insurance can complement informal risk-sharing networks by mitigating problems of informational asymmetry and self-control issues.

Keywords: Microinsurance Markets, Indexed Insurance, Rainfall, Migration, Informal Insurance Networks

JEL Classification: O15, O16, G21

Suggested Citation

Kazianga, Harounan and Wahhaj, Zaki, Will Urban Migrants Formally Insure Their Rural Relatives? Family Networks and Rainfall Index Insurance in Burkina Faso (March 2018). Centro Studi Luca d'Agliano Development Studies Working Paper No. 436, Available at SSRN: https://ssrn.com/abstract=3182474 or http://dx.doi.org/10.2139/ssrn.3182474

Harounan Kazianga (Contact Author)

Oklahoma State University - Stillwater ( email )

Stillwater, OK 74078-0555
United States

Zaki Wahhaj

University of Kent - Department of Economics ( email )

Keynes College
Kent, CT2 7NP
United Kingdom

University of Namur ( email )

8 Rempart de la Vierge
Namur, 5000
Belgium

University of Kent - School of Economics ( email )

CT2 7NP
United Kingdom

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