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A New Approach to Insurance in Rural Africa

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  • Hans Hoogeveen

    (Vrije Universiteit, Economics Department, Amsterdam)

Abstract

Existing informal insurance arrangements are generally able to deal with information and enforcement problems but are unable to create large risk pools. This makes these arrangements ineffective against many types of (covariate) risks. The marriage system of the Shona in Zimbabwe, in which bride wealth is demanded for a daughter when she gets married, is an informal insurance arrangement that is able to create a large risk pool, while maintaining at the same time possibilities for close monitoring and enforcement. This paper explores whether the Shona marriage system may serve as a basis for a formal insurance arrangement. It is argued that in combination with an organization similar to that of micro-credit programmes, insurance can be offered in areas where formal insurances do usually not operate. A pilot will have to establish the precise way in which the scheme should be organized. The Geneva Papers on Risk and Insurance (2001) 26, 505–513. doi:10.1111/1468-0440.00135

Suggested Citation

  • Hans Hoogeveen, 2001. "A New Approach to Insurance in Rural Africa," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 26(3), pages 505-513, July.
    • Handle: RePEc:pal:gpprii:v:26:y:2001:i:3:p:505-513
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    Cited by:

    1. Md. Shafiul Azam & Katsushi Imai, 2009. "Vulnerability and Poverty in Bangladesh," Economics Discussion Paper Series 0905, Economics, The University of Manchester.

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