Necessity as the Mother of Invention: How Poor People Protect Themselves Against Risk

The paper states that poor people face a wide spectrum of risks and use a wide spectrum of insurance systems to address those risks. It presents the results of MicroSave-Africa's work to date and examines the risks facing the poor and how they use a wide variety of mechanisms to protect themselves against those risks.

The paper emphasises on the preventive measures rather than the responses and draws on a wide variety of qualitative research tools to understand the complexities of poor people's lives. Over 2,500 poor people were interviewed using Focus Group Discussions, in-depth individual interviews and PRA tools including wealth ranking, life-cycle analysis, time series analysis, financial services matrixes, venn/chapati diagrams and seasonality analysis.

Concludes that the vast majority of the insurance mechanisms used by poor people are informal in nature. There is however, a growing interest in, and effort to provide, semi formal sector insurance mechanisms and, in some cases, efforts are being made to link MFI clients to formal sector insurance companies.