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Jump to: navigation, search Microinsurance is the protection of low-income people against specific perils in exchange for regular premium payment proportionate to the likelihood and cost of the risks involved. This definition is exactly the same as one might use for regular insurance except for the clearly prescribed target market: low-income people. The target population typically consists of persons ignored by mainstream commercial and social insurance schemes, as well as persons who have not previously had access to appropriate insurance products. The institutions or set of institutions implementing microinsurance are commonly referred to as a microinsurance scheme.
1 Definitions of microinsurance 2 Microinsurance products 3 Microinsurance delivery models 4 Microinsurance scheme 5 Microinsurance and development 6 See also 7 References 8 External links
 Definitions of microinsurance
1. Microinsurance is insurance with low premiums and low caps / coverage. In this definition, “micro” refers to the small financial transaction that each insurance policy generates. The Microinsurance Regulations, issued in 2005 by the Indian Insurance Regulatory and Development Authority (IRDA), for example, adopted this definition in explaining “microinsurance products” as those within defined (low) minimum and maximum caps. The IRDA’s characterization of microinsurance by the product features is further complemented by their definition for microinsurance agents, those appointed by and acting for an insurer, for distribution of microinsurance products (and only those products). 2. Microinsurance is a financial arrangement to protect low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved. The author of this definition adds that micro-insurance does not refer to: (i) the size of the risk-carrier (some are small and even informal, others very
Microinsurance links multiple small units into larger structures. access to reinsurance etc. and lack of good governance. and likewise. revolving drugs funds. data banks. includes the critical features of the previous three: 1.). 4. decisions in microinsurance are made within each unit. regardless of its small unit size and its activities at the level of single communities. (iii) the delivery channel: it can be delivered through a variety of different channels. (ii) the scope of the risk (the risks themselves are by no means “micro” to the households that experience them). smaller than national) level of society. may be offered for a wide variety of risks.  Microinsurance products Microinsurance. injury. like regular insurance. creating networks that enhance both insurance functions (through broader risk pools) and support structures for improved governance (i.e. communities are involved in the important phases of the process (such as package design and rationing of benefits). Insurance functions on the concept of risk pooling. but also by enormous multinational insurance companies. research facilities. The last definition therefore. is the active involvement of the community in revenue collection. including crop insurance. and has been noted to be the first recorded use of the term “microinsurance”. including community health funds. mutual health organizations. or death) and property risks (damage or loss). including small community-based schemes. 3. so does microinsurance. livestock/cattle . It was first published in 1999. etc. frequently. political instability. training.large companies). Microinsurance is synonymous to community-based financing arrangements. at the level of governments. clients are essentially low-net-worth (but not necessarily uniformly poor). and 4. Most community financing schemes have evolved in the context of severe economic constraints. companies.  This definition integrates the above approaches into one comprehensive conceptual framework. the essential role of the network of microinsurance units is to enhance risk management of the members of the entire pool of microinsurance units over and above what each can do when operating as a stand-alone entity. 2. etc. transactions are low-cost (and reflect members’ willingness to pay). credit unions or other types of microfinance institutions. (rather than far away. and its main objective is to pool both risks and resources of whole groups for the purpose of providing financial protection to all members against the financial consequences of mutually determined risks.e. resource allocation and. 3.). rural health insurance. NGOs that offer support in operations. pooling. independent of permanent external financial lifelines. Under this definition. This mechanism is conceived as an autonomous enterprise. These include both health risks (illness. and community involvement in user-fee management. The common feature within all. Microinsurance is the use of insurance as an economic instrument at the “micro” (i. pre-dating the other three approaches. service provision. A wide variety of microinsurance products exist to address these risks.
delivery. As Dubby Mahalanobis states. the provider-driven model. many countries face continuing challenges. micro health insurance schemes are having trouble with financial and institutional sustainability. and working with external healthcare providers to offer services. This model is advantageous for its ability to design and market products more easily and effectively. microinsurance schemes benefit from limited risk. Methods and models for doing so vary depending on the organization. Specifically in Bangladesh. Partner agent model: A partnership is formed between the micro insurance(partner as MFI) scheme and an agent (insurance companies). death insurance. insurance for natural disasters. There is an advantage once more in the amount of control retained. the full-service model. insurance for theft or fire. Micro Insurance Centre is an example of an organization using this model. as Maxime Prud'Homme and Bakary Traoré describe in Innovations in Sikasso. The microinsurance scheme is responsible for the delivery and marketing of products to the clients. otherwise microinsurance could do more harm than good. managing and owning the operations. In this model. Still. Full service model: The microinsurance scheme is in charge of everything. there are four main methods for offering microinsurance the partner-agent model. Tricky challenges In general. Syed Abdul Hamid and Jinnat Ara describe. yet disadvantage in the limitations on products and services. Progress in Bangladesh  Microinsurance delivery models One of the greatest challenge for microinsurance is the actual delivery to clients. institution. but are also disadvantaged in their limited control. Each of these models has their own advantages and disadvantages. yet the disadvantage of higher risks. term life insurance. and provider involved. and service. but things are improving. etc.  Microinsurance scheme . one must be thorough and careful when making policies. both the design and delivery of products to the clients. Provider-driven model: The healthcare provider is the microinsurance scheme. while the agent retains all responsibility for design and development. Microinsurance has made a significant difference in countries like Mali. and in some cases a third-party healthcare provider. working with external healthcare providers to provide the services. is responsible for all operations. design. disability insurance. yet is disadvantaged by its small size and scope of operations. and the community-based model. Community-based/mutual model: The policyholders or clients are in charge. health insurance.insurance. and similar to the full-service model. This model has the advantage of offering microinsurance schemes full control.
Microinsurance schemes may cover various risks (health. massive impact  Microinsurance and development Microinsurance is recognized as a useful tool in economic development. Risk-sharing: the pooled contributions are used to pay a financial compensation to those who are affected by predetermined risks. Membership is not compulsory (but can be automatic). and bad yields in year of drought. and members pay. maternity.. in line with a predefined benefits package. a health mutual benefit association) or the set of institutions (in the case of linkages) that provide insurance or the insurance service itself provided by an institution that also handles other activities (e. etc. but which have a much lower yield in good weather conditions. microinsurance makes it possible for people to take more risks. they will be inclined to do the opposite. The scheme differs from others created to provide legal social protection to formal economy workers. etc. and those who are not exposed to these risks do not get their contributions back. The use of the mechanism of insurance implies: Prepayment and resource-pooling: the regular prepayment of contributions (before the insured risks occur) that are pooled together. housing Crop microinsurance Dirk Reinhard provides a good list summarising reading pertinent to microinsurance. The expression "microinsurance scheme" designates either the institution that provides insurance (e. they are vulnerable to fall back into poverty in times of hardship. the necessary contributions in order to cover benefits. since they have to safeguard a minimal level of income for themselves and their families. Furthermore. crops will be grown which are more drought resistant. Guarantee of coverage: a financial compensation for a number of risks.).A microinsurance scheme is a scheme that uses.  . Without the insurance however. As many low-income people do not have access to adequate risk-management tools. When farmers are insured against a bad harvest (resulting from drought).g. primary health care..) Disability microinsurance Property microinsurance – assets. among others. at least in part. or when high hospital bills force families to take out loans with high interest rates. particularly. the most frequent microinsurance products are: Life microinsurance (and retirement savings plans) Health microinsurance (hospitalisation. livestock. life. informal economy workers and their families. Small means. for example when the breadwinner of the family dies. a micro-finance institution). they are a in a better position to grow crops which give high yields in good years. an insurance mechanism whose beneficiaries are (at least in part) people excluded from formal social protection schemes.g.
with or without an accident benefit rider. D. Protecting the Poor: A Microinsurance Compendium. "Effectiveness of community health financing in meeting the cost of illness". William Hsiao. ^ a b Churchill C. and “life microinsurance product” means any term insurance contract with or without return of premium. "Micro-insurance: Extending Health Insurance to the Excluded".00034. David Dror. ^ a b Alexander S. Geneva: ILO.org/w/index.  External links Microinsurance at the Open Directory Project Access to Insurance Initiative Microinsurance Network Microinsurance Innovation Facility Global Information on Microinsurance Retrieved from "http://en. Risk. as per terms stated in Schedule-I appended to these regulations”. doi:10. Jacquier Ch (1999). such as. Guy Carrin. as per terms stated in Schedule-II appended to these regulations.wikipedia. ^ Dror. any endowment insurance contract or health insurance contract. 4. any contract covering the belongings. livestock or tools or instruments or any personal accident contract. ^ Dercon Stefan (2005). Bulletin of the World Health Organisation (Geneva: WHO) 80 (2): 143–150. Dyna ArhinTenkorang (2002). Preker.) (2006). 3. 2. ^ “General microinsurance product means health insurance contract.1111/1468246X. either on individual or group basis. (ed. Melitta Jakab. See also Friendly society Health economics Insurance in India Microfinance  References 1. hut. either on individual or group basis.php?title=Microinsurance&oldid=524917778" View page ratings Rate this page What's this? . International Social Security Review (Geneva: ISSA) 52 (1): 71–97. Insurance and Poverty: A Review. 5.
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