Micro Insurance for Protecting Livelihoods
This paper states that access to financial services like credit, savings and insurance are necessary to promote poor people’s livelihoods. While Indian MFIs cater to poor people’s credit and savings needs, there is a gap in their access to insurance. This gap in risk management solutions is acute because of:
- Development of nuclear families and the resulting unavailability of support that the joint family system provided;
- Lack of social protection programs;
- Low formal insurance sector penetration.
The current situation provides an opportunity for various stakeholders to deepen the microinsurance market. BASIX, in India, has adopted a strategy of providing livelihood financial services, agriculture/ business development services and institutional development services to the poor in over twelve states in India. In partnership with insurance companies, BASIX offers more than 600,000 individuals insurance for life, health, livestock, non-farm enterprises and agriculture.
BASIX’s efforts reveal that challenges to insurance provision for the poor exist mainly in the following areas:
- Developing a low cost distribution and servicing model;
- Building institutional capacity;
- Creating awareness;
- Regulatory environment;
- Managing agricultural risks.
