Agent Incentives to Maximize Profits and Social Welfare from a Catastrophic Drought Insurance?

Last registered on June 16, 2025
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Pre-Trial

Trial Information

General Information

Title
Agent Incentives to Maximize Profits and Social Welfare from a Catastrophic Drought Insurance?
RCT ID
AEARCTR-0016218
Initial registration date
June 12, 2025

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
June 16, 2025, 7:24 AM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Name
Karlijn Morsink
Affiliation
Utrecht University School of Economics
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Other Primary Investigator(s)

PI Name
Hongdi Zhao
PI Affiliation
Cornell University
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Additional Trial Information

Status
On going
Start date
2024-08-31
End date
2027-08-31
Keywords
Agriculture, Finance & Microfinance
Additional Keywords
JEL code(s)
Secondary IDs
Prior work
This trial is based on or builds upon one or more prior RCTs.
Abstract
While the demand for and design of index insurance products has been extensively
studied, there is limited understanding of how incentives for agents that promote insurance
influence demand and consumer welfare. This paper explores the optimal
incentive structures for insurance agents in the context of a public-private partnership
where insurers’ objectives are to maximize profits and government’s objectives are
to maximizes social welfare. We implement a cluster randomized control-trial where
agents are randomly assigned to sales, renewal and consumer knowledge incentives.
We investigate the effect of these incentives on insurance take-up, insurance renewals,
and consumer knowledge.
External Link(s)

Registration Citation

Citation
Zhao, Hongdi and Karlijn Morsink. 2025. "Agent Incentives to Maximize Profits and Social Welfare from a Catastrophic Drought Insurance?." AEA RCT Registry. June 16. https://doi.org/10.1257/rct.16218-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2025-01-01
Intervention End Date
2025-10-01

Primary Outcomes

Primary Outcomes (end points)
• Insurance take-up
• Insurance renewal
• Consumer knowledge
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The insurance-based financial product that we study is a catastrophic drought insurance. The program through which this product is delivered is a public-private partnership between the government and a regional re-insurer that partners with insurance companies
that underwrite the catastrophic drought risk. The regional re-insurer engages with insurance
agents who are responsible for the promotion and sales of the product.
For the research, we identified 393 communities where agents are actively promoting and selling the product in the
upcoming seasons. We randomize communities into alternative incentive structures that
vary whether agents receive additional sales incentives, renewal incentives, and consumer
knowledge incentives.
Experimental Design Details
Not available
Randomization Method
Randomization is done in an office by a computer
Randomization Unit
Communities
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
393
Sample size: planned number of observations
For household outcomes 4716 households; for community outcomes 393 communities.
Sample size (or number of clusters) by treatment arms
93 basic sales incentive communities; 100 basic sales incentive + additional sales incentive communities; 100 basic sales incentive + renewal incentive communities; 100 basic sales incentive + consumer knowledge incentive communities
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
International Livestock Research Institute (ILRI) Institutional Eesearch Ethics Committee (IREC)
IRB Approval Date
2024-01-30
IRB Approval Number
ILRI-IREC2023-76
Analysis Plan

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