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Client satisfaction and product understanding as drivers for insurance renewal – A case study in Mali

Ella Kirchner and Oliver Musshoff

No 321216, 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium from Agricultural Economics Society - AES

Abstract: Agricultural microinsurance are a promising risk management tool for smallholder farmers. However, adoption rates remain low and only a small share of farmers renews their policy after the first period. Yet, it is essential for the sustainability of an insurance scheme to retain a solid customer base. To date, it is largely unknown what drives the decision to renew an agricultural microinsurance policy. We address this question by performing mean comparisons and logistic regressions based on collected primary data on 479 smallholder farmers in Mali who purchased a weather index-based insurance in 2020. Results show low levels of understanding of the product among all clients, but especially among those who did not renew. Similarly, the level of satisfaction was considerably higher among clients who renewed. Both factors were confirmed as drivers for renewal. Yet, in line with previous findings, the receipt of a payout had the strongest effect on the renewal decision whereas harvest loss in the most recent season was not having an impact. We conclude that additional efforts to foster client satisfaction as well as to promote understanding of agricultural insurance among smallholder farmers are highly recommended.

Keywords: Agricultural Finance; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 20
Date: 2022-04
New Economics Papers: this item is included in nep-agr and nep-mfd
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aesc22:321216

DOI: 10.22004/ag.econ.321216

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