Uptake of Multiple Microinsurance Schemes: Evidence from Sri Lanka

Abstract

Since it is common among households to use more than one form of microinsurance, this paper estimates the uptake of different kinds of microinsurance by the same population. We use a multivariate probit model, which examines the participation in the different forms of insurance simultaneously. By doing this, we can establish whether participation patterns in different types of microinsurance options indicates if the participation in specific insurance schemes is complementary or a substitute. We establish that membership of a microfinance institution means that households are more likely to have purchased an insurance policy. Furthermore, the study describes a need for more inclusive and composite packages of microinsurance products for greater financial inclusion of the poor.Keywords: Microinsurance, Microfinance, Household Behaviour, Sri Lanka JEL Code: G22, O16, R221 The financial support for the research underlying this paper was provided by the British Academy (SG-44036) and we gratefully acknowledge the support of the Institute of Policy Studies of Sri Lanka (IPS) in carrying out the field survey. All errors are our own.