Insuring Against Extreme Heat: A Randomised Evaluation

This randomised evaluation tests whether a novel parametric heat insurance scheme can protect informal workers in India from the costs of extreme heat. The intervention, developed by the Self Employed Women’s Association (SEWA), provides automatic daily wage payments to informal workers when local temperatures exceed predetermined thresholds. In partnership with SEWA, we implement a village-level cluster-randomized encouragement design, where SEWA grassroot leaders are incentivized to focus recruitment efforts in randomly selected “priority” villages, whereas control villages receive no directed outreach. We measure the impact on heat-adaptive behaviours, financial coping strategies, and welfare (inc. physical and mental health). We examine heterogeneity in these effects (e.g. by occupation, prior exposure to heat, and access to financial buffers) and explore how impacts vary with the number of insurance payments received. The study also investigates willingness to pay and perceptions of climate insurance, with the aim of informing scalable, climate-responsive social protection.