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Home » News & Opinion » Microinsurance Industry Sees Profits from the Poor

Microinsurance Industry Sees Profits from the Poor
Creagh, S.

Slum-dweller Krustin bin Juri lost everything when floodwaters swept through his home and shop on the banks of Jakarta's filthy Ciliwung river two years ago. But when the next flood hits, and it will because Jakarta sees frequent floods in the rainy season, bin Juri may have a modicum of protection thanks to a low-cost insurance policy that he purchased this month. He is among millions of the world's poor who are covered for natural disasters by cheap insurance, or microinsurance, as commercial firms recognize that insuring the poor is not just good public relations but also profitable.

"Interest in microinsurance has been exploding throughout the world. New projects and proposals are being developed in more and more countries. Government policy-makers are reviewing their regulations and the microinsurance sector does not appear to have been slowed by the crisis," said Craig Thorburn, a senior insurance specialist at the World Bank who has developed microinsurance programs and who advises countries on insurance market development.

Investors are also seeing potential in what could be a multi-billion dollar industry. The Leapfrog Financial Inclusion Fund announced last week that it had raised US$44 million for what it said was the world's first microinsurance fund. "The world desperately needs market-based solutions to poverty that draw in major financial investors by offering fair but competitive returns," said Dr. Andrew Kuper, President and Founder of LeapFrog, a Luxembourg-based fund.

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07 Jul 2009
Poor also need insurance

Life Insurance is becoming part and parcel of MFI's loan products nowadays. Discussions with beneficiaries have revealed that they do have interest in getting their lives insured at a reasonable premium with periodical repayments. The potential is vast and unexplored. MFIs and Insurance companies can collaborate and design cheap products to cater to the needs of poor. Presently the focus of MFIs is to cover their loans only, but when more financial benefits are expected to accrue, then there will be a lot of takers. Adding Mediclaim and Accident Death benefits will go a long way in attracting the poor. An additional cover can be thought of for flood and earthquake prone areas.

Sreenivasan Gopalakrishnan India

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Posted: 29 Jun 2009
Source: Reuters
Originally Published: 24 Jun 2009