Abstract

We explore the benefits of partnerships between governments and private insurers in the context of inclusive insurance (also referred to as microinsurance), as powerful and cost-effective tools for achieving poverty reduction. To explore these ideas, we model the capital of a household from a ruin-theoretic perspective to measure the impact of microinsurance on poverty dynamics and the governmental cost of social protection. We compare a few scenarios: uninsured, insured without subsidies and insured with various subsidies. Although insurance alone (without subsidies) may not be sufficient to reduce the likelihood of falling into the area of poverty for specific groups of households, since premium payments constrain their capital growth, our analysis suggests that subsidised schemes can provide maximum social benefits while reducing governmental costs.

Speaker

Corina Constantinescu (University of Liverpool)