“As microﬁnance has shown that the poor are bankable, microinsurance is showing that they are insurable as well.”
Insurance is rapidly gaining popularity as an additional ﬁnancial tool to help people
The experimentation of the last ten years
living with poverty coping with the risks and vulnerabilities they face in everyday live.
has seen failures as much as success
Saving is the traditional way to deal with such risks whereas borrowing comes in to
stories. Careful analysis of both has resulted
strengthen income earning capacity or stabilise family incomes. Insurance extends the
in a body of literature, manualsand guide-
coping capacity to a next level of leverage as it increases the scope of risk coverage.
lines that carries the sector further. Clear don’ts have been identiﬁed, while do’s
The growing popularity of insurance as an additional coping tool can be explained in
are gaining wide acceptance across the
various ways. Established insurance providers are continuously looking for expansion
sector. This contributes to the develop-
of their activities and have made inroads into the lower segments of the market.
ment of a policy framework that, though
Development organisations are looking for ways and means to support their target
still being work in progress, already
groups in strengthening their coping capacities. Microﬁnance institutions develop
shows potential for bringing various
new ﬁnancial products and services to meet increasing client demand, and donor
actors and parties together to enhance
agencies are supporting policy and practice changes towards a more inclusive
insurance delivery to the poor in a rather
approach of ﬁnancial service delivery to contribute to the realisation of the Millennium
substantial, if not spectacular way.
Development Goals. The single most crucial element of this Moreover, in the last ten years a good deal of pioneering and experimentation in
policy framework is the recognition
the ﬁeld of microinsurance has been conducted, which resulted in a growing conﬁdence
that successful microinsurance must be
that insuring poor people is actually possible. As microﬁnance has shown that
demand based. Demand for insurance
the poor are bankable, microinsurance is showing that they are insurable as well.
should come from the clients, the poor; should not be pushed upon them by
The same experience is also showing that they are not insurable just like that. Risk
insurance companies, NGOs, MFIs or
levels are high and risks are difﬁcult to assess. The longer term horizon of insurance
funding agencies. Acceleration of the
beneﬁts may not always be easy to digest or appreciate by clients living in a day-to-
sector, in other words, must be gene-
day survival environment. Exclusion of high-risk clients is part and parcel of the
rated by the clients themselves if it is
insurance system, which may undercut solidarity based development approaches.
And some clients tend to beneﬁt more from insurance schemes than others, though all have to pool the same resources to keep the system going.
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