Mobile Microinsurance: Overcoming Barriers to Uptake

Mobile Microinsurance: Overcoming Barriers to Uptake

From Emma Schmidt

Our research team is conducting a randomized control trial to test whether group marketing techniques can be leveraged to overcome barriers to uptake of mobile microinsurance among smallholder farmers in Kenya.

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Smallholder farmers worldwide are experiencing economic hardships more frequently as unpredictable rainfall and rising temperatures contribute to crop failure. There is a growing need for innovative measures to mitigate climate risks for smallholder farmers. Mobile microinsurance is a financial instrument that has significant potential to protect farmers from large-scale climate shocks. It provides safety nets at a low premium for low income farmers by using weather indices and mobile money transfer services, eliminating the need for costly in-person crop assessments. Microinsurance compensates farmers in the face of climate shocks, helping them cope with income losses. But despite its promise, uptake of microinsurance remains low. 

In May 2019, members of our team conducted exploratory research in the Mount Kenya region, surveying farmers as well as key microinsurance stakeholders. We found that community capacity is high amongst farmers in the region, with many active in farming self-help groups and co-ops. Within these groups, farmers share information, provide and receive support, and market crops. We believe that these offering lower group premiums to farmers involved in farming associations is one way to leverage these informal networks and increase uptake of mobile microinsurance.

By conducting a randomized control trial, we aim to answer the following questions:

  • How might marketing agricultural microinsurance to groups lower the trust and liquidity barriers that have historically prevented smallholder farmers from accessing such financial services? 

  • Can existing social structures (e.g. farmers’ associations) be leveraged to overcome barriers to financial inclusion? 

This summer, we are traveling to the Mount Kenya region to conduct our study. Donations towards this research will go towards travel fees for the William and Mary research team, compensation for local research assistants, and incentives for our research participants. To learn more about the project, please reach out by emailing [email protected] Thank you for your support! 

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