Weather index insurance viability in mitigation of climate change impact risk: a systematic review and future agenda

Abstract

Purpose The purpose of the present paper is to review studies on weather index-insurance as a tool to manage the climate change impact risk on farmers and to explore the study gaps in the currently existing literature by using a systematic literature review. Design/methodology/approach This study analyzed and reviewed the 374 articles on weather index insurance (WII) based on a systematic literature search on Web of Science and Scopus databases by using the systematic literature review method. Findings WII studies shifted their focus on growing and emerging areas of climate change impact risk. The finding shows that the impact of climate change risk significantly influenced the viability of WII in terms of pricing and design of WII. Therefore, the cost of WII premium increases due to the uncertainty of climate change impact that enhances the probability of losses related to insured weather risks. However, WII has emerged as a risk management tool of climate insurance for vulnerable agrarian communities. The efficacy of WII has been significantly influenced by repetitive environmental disasters and climate change phenomena. Research limitations/implications This study will be valuable for scholars to recognize the missing and emerging themes in WII. Practical implications This study will help the policy planners to understand the influence of climate change impact on WII viability. Originality/value This study is the original work of the author. An attempt has been made in the present study to systematically examine the viability of WII for insuring the climate change risk.