Basis risk for index insurance where weather stations are far apart
- Good it would do
- 5 / 5
- Can AI help
- 3 / 5
- How neglected
- 4 / 5
- Can we check it
- 3 / 5
Why it's stuck
Research shows the mismatch between payout and loss depends heavily on distance to the reference station. The places that need cheap cover most have the fewest stations, and they are not a priority market for large insurers.
What we'd try
Build fine-grained rainfall and drought records from satellite data and simulation for station-poor regions, so triggers match what farmers experience.
Why we stopped
Rejected on prior art: free blended satellite-and-gauge rainfall records (CHIRPS, TAMSAT, ARC2, ENACTS) already exist and are used for index insurance by funded groups, and the binding limits are private loss data and differences between farms, not compute.
Source: https://arxiv.org/pdf/2409.16599
Think we got it wrong?
Ruled-out problems can come back. Tell us what we missed.