Intervention(s)
The aim of this intervention is two-fold: First, to understand the price elasticity of demand for a parametric rainfall insurance product offered by Axinan Pte Ltd (brand name “Igloo”) among rice farmers in Vietnam. Second, to study the effects of this insurance on rice farmers’ behavior, such as their agricultural investments, their awareness of weather risks, and other outcomes. The insurance product is tailored to rice farmers, who can purchase a 30-day insurance coverage for a premium of 50,000 VND per hectare of land (at the time of the study). The insurance product provides coverage against the risk of excessive rainfall. If a heavy rainfall event occurs (i.e., when the amount of rainfall in the farmer’s district exceeds one of three pre-defined thresholds over a five-day period), insured farmers receive a payout within 5 days of the event.
At the intervention's core is the distribution of vouchers that allow purchasing Igloo’s rainfall insurance at a discounted price to randomly selected households participating in the Vietnam Rice Farmer Panel Survey. The Rice Farmer Panel Survey, implemented by RWI – Leibniz Institute for Economic Research and the Mekong Development Research Institute (MDRI), covers approximately 3,000 rice-farming households in 200 villages across four provinces of the Mekong Delta region in Vietnam.
To study the effect of pricing on realized insurance purchases, 75% of the survey respondents are offered vouchers to purchase Igloo’s parametric rainfall insurance at a discounted price, with the level of the discount being randomized. The discounts range from 10% to 90% of the market price of the insurance.
The voucher can be used to purchase Igloo’s parametric rainfall insurance at a discounted price. Recipients of the voucher can decide the length of the period they want to purchase insurance coverage for, choosing between 30 days, 60 days, 90 days, 120 days, and 150 days. Recipients of the voucher can also decide the size of land farmed with rice for which they want to purchase insurance coverage, choosing between one to five hectares.
The vouchers for premium discounts will be printed and sent to about 2,250 survey households by postal mail in November 2024. The delivery will be by certified mail, using an in-person service, in which post office officials make three attempts to deliver the mail to survey households in person. Each household receives a letter containing the following material:
• the voucher
• an information leaflet explaining how Igloo’s parametric rainfall insurance product works
• an information leaflet explaining how the voucher can be redeemed and informs about the district-specific strike levels of the parametric rainfall insurance
• an (empty) insurance certificate that contains the district-specific strike levels of the parametric rainfall insurance
• an envelope with a stamp for returning the insurance certificate to Igloo to redeem the voucher.
Data on farmers’ realized purchase behavior will be sourced from Igloo’s customer database in December 2024 and again in April 2025. Data on farmers' agricultural outcomes will be collected during wave 2 (Dec 2024 – Jan 2025) and wave 3 (Dec 2025 – Jan 2026) of the Vietnam Rice Farmer Panel Survey.