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Citation Information

Type Conference Paper - Australian Agricultural and Resource Economics Society 52 nd Annual Conference 2008
Title Determinants of Participation in a Catastrophe Insurance Programme: Empirical Evidence from a Developing Country
Author(s)
URL https://ideas.repec.org/p/ags/aare08/5984.html
Abstract
The paper presents empirical evidence of the determinants of catastrophe insurance participation
in one of the poorest and most disaster prone countries in the world. In a large-scale household
survey carried out in 2006 we ask 3,000 residents in six different districts in Bangladesh facing
various environmental risk exposure levels about their willingness to participate in a catastrophe
insurance programme. Combining factors put forward in risk theory and economics, we estimate
a model of insurance participation. We show that the household decision to participate in the
insurance programme differs depending on both exogenous and endogenous risk exposure levels.
As predicted by micro-economic theory, ability to pay, measured in terms of household income
and access to credit, significantly affects insurance participation. Furthermore, among the sociodemographic
factors investigated in this case study, respondent education and occupation are
found to significantly influence household decision making. Our study suggests that low
participation rates for catastrophe insurance in a developing country can be explained by high
rates of illiteracy and limited access to credit.

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