Climate change is increasing the risks of weather-related disasters in many regions around the
world. This has an adverse socio-economic impact on households, farmers and small businesses.
Some strategies for effectively managing climate related disasters include index based insurance
products, which are increasingly offered as alternatives to traditional insurance, particularly in
low-income countries. However, the uptake of index insurance remains low, which can be
partially attributed to the inherent problem of basis risk. This review assesses the problem of
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