Why The World's Poor Refuse Insurance

Microloans are welcome, but the world's poor won't touch microinsurance. Why?

ILLUSTRATION FOR TIME BY EDEL RODRIGUEZ

There are higher-yielding varieties of groundnut than those that farmers in Malawi tend to plant, but getting them to switch is tough. Better seed is pricey, increasing their risk. So researchers from the World Bank ran an experiment. With local NGOs, they offered the farmers loans. Some loans even came with a crop-insurance policy: if the season was dry and the yield a dud, the debt would be forgiven. The farmers' risk was lowered. Of farmers offered conventional loans, 33% signed up. With the added incentive of insurance, 18% did. The researchers were puzzled.

It's been more than 30 years since...

Want the full story?

Subscribe Now

Subscribe
Subscribe

Get TIME the way you want it

  • One Week Digital Pass — $4.99
  • Monthly Pay-As-You-Go DIGITAL ACCESS$2.99
  • One Year ALL ACCESSJust $30!   Best Deal!
    Print Magazine + Digital Edition + Subscriber-only Content on TIME.com

Learn more about the benefits of being a TIME subscriber

If you are already a subscriber sign up — registration is free!