Research Handbooks in Financial Law series
Edited by Julian Burling and Kevin Lazarus
Chapter 19: Microinsurance: The Value Proposition at the Base of the Pyramid
Arup Chatterjee 1. INTRODUCTION There is improved visibility of ﬁnancial inclusion on the global agenda today. A keynote area is the signiﬁcant commitment demonstrated by government and business leaders today for garnering efforts towards bringing the uninsured, the unbanked and the marginalized members of society into the mainstream economy through ﬁnancial market development. Microinsurance is central to the promotion of inclusive ﬁnancial systems. It is gaining in popularity and happens to be one of the most signiﬁcant growth areas in the development of the insurance sector. Recent evidence from many developing countries has demonstrated that not only can the poor afford to make small periodic contributions towards insuring themselves against risks, but that the risks they face are eminently insurable. Microinsurance is seen as an important tool for expanding ﬁnancial access by increasing the ability of the poor to deal with various risks, beyond the combined impact of microﬁnance programs, safety nets and existing, informal mutual support systems. In a sense, microinsurance is similar to providing basic services like sanitation, electricity, or water and therefore is seen as a mantra for poverty reduction and social harmony. There is indeed a signiﬁcant demand for a range of insurance products like protection of assets, lives, health and retirement. Moreover, as today’s global poor become tomorrow’s mass market, microinsurance not only represents a mechanism for tackling poverty, it also offers a potentially new revenue stream, and should be an essential element of the long-term global growth strategy of insurance...
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