Two features set LAC apart from developed regions in terms of risks coverage: private insurance penetration is low, and informal self-insurance insurance is high. This paper aims to characterize these phenomena and establish several facts. 

First, across countries, family and friends are the main support against adverse events. Relying on these informal insurance mechanisms raises concerns because common shocks (e.g. extreme weather events) reduce their efficacy. 

Second, conditional on other observed characteristics, women and low-income households are more likely to rely on their networks than men and high-income households when facing a financial emergency. 

Third, there is no parallel between low penetration of insurance products and other financial products (such as credit cards or mortgages). When households are asked why they hesitate to get private insurance products, low trust in insurance companies emerges as a key reason. 

Fourth, private insurance penetration increases dramatically with income level; however, conditional on income, more educated individuals are more likely to purchase insurance. Coupled with the low observed levels of financial literacy in LAC, this hints at the possibility that the lack of financial literacy might hamper demand for formal insurance products. Put together, these findings highlight that the failure of social insurance in covering risks finds little remedy in complementary mitigation strategies.