What is Microinsurance?
Rich or poor, we all face financial risk every day. But
for many poor people in the developing world, a multitude of risks
threaten to derail any progress they have made to work their way
out of poverty.
Microinsurance - the protection of low-income people against
specific perils in exchange for regular monetary payments
(premiums) proportionate to the likelihood and cost of the risk
involved - seeks to provide a suitable solution for managing these
risks.
Until recently, there were very few formal insurance solutions
available to the poor, and many policies were too complicated, too
much out of line with the specific requirements of the poor, and
just too expensive. In many cases, unfortunate experiences with
inappropriate insurance products led to lack of understanding and
mistrust of insurance. Today, microinsurance aims to enable the
poor to manage risk through a range of suitable and affordable
insurance products.