Application of Microfinance and Micro Insurance for Disaster Risk Management

This paper presents The Regional Risk Transfer Initiative (RRTI) project as an innovative approach to risk identification, pooling, and transfer.

A vast majority of the poor and disaster affected victims have limited access to risk transfer schemes and disaster mitigation measures. Risk transfer:

• Can take place either through the provision of credit, through micro insurance schemes or through proactive mitigation measures;
• Allows individuals to reduce their vulnerability to the crippling impacts of a disaster.

The RRTI is a project to:

• Develop, demonstrate and accelerate the application of microfinance and micro insurance for mitigating disaster risk;
• Create a provision of microfinance and micro insurance for safer communities and to act as good practice case study example of risk transfer.

The paper identifies that the main objective of this initiative is the convergence of micro mitigation, micro credit and micro insurance to:

• Help poor people transfer risks that cannot be eliminated;
• Have safety nets during times of disaster;
• Connect the corporate sector, in particular the insurance industry, more closely to the poor on managing disaster risks.

The paper concludes that the model will be used as an example of best practice to influence the development of risk transfer schemes across India and South Asia.