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“To be serviced efficiently and effectively, insurance provision must be affordable, simple, timely and relevant to their specific risks.”

Other forms of insurance, however, may

single client would feel excluded, it is not

not be collective, may be sensitive to

very sensitive to fraud or debate, and the

fraud or interpretation, may be difficult

risks are not too difficult to calculate.5

to assess in terms of risk exposure, and

Complexity4

The scheme is collective, meaning that no

Crop and livestock Health and disability Retirement and pension Property Life and loans

may not be so simple to integrate with an institution’s administrative systems. And it is because of the added complexity of these products that the question has been raised if microfinance institutions would do wise to become directly involved in the provision of microinsurance products, other than life and loan. This question will be addressed in the next section. From a client perspective, it may be useful to reiterate their stakes in being serviced. Insurance essentially provides an added coping mechanism to better deal with risk events. To be serviced efficiently and effectively, insurance provision must be affordable, simple, timely and relevant to their specific risks.

In the absence of reliable government statistics the institution’s own experience-based data are often enough. Again the case of BRAC: out of the some 4 million members of their groups, approximately 60,000 die every year. At a benefit level of Taka 3000 (Euro 20), BRAC can calculate that it needs to pay approximately of Euro 1.2M every year in benefits, which is debited to the gross profit it realises. MICROINSURANCE 5

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Micro-insurance.indd 18-19

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7/4/05 4:42:46 PM

Microinsurance brochure  

Microinsurance brochure

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