Sa-Dhan Newsletter Volume 1 Issue 4

Micro-Insurance

Sa-Dhan Newsletter

Volume 1, Issue 4 March 2002

Special Issue

Sa-Dhan

The Association of

Microinsurance:

Community Development

Social Security versus Commercially Viable Product

Finance Institutions

From the Editor's Desk

CONTENTS

Dear Readers,

1. Integrated Insurance

Insurance is a tool in the hands of resourceful to mitigate the future uncertainty. Insurance

Services to the Poor :

products are designed on the assumption that anyone, with savings after meeting the

The Sewa Experience

present basic needs, would ideally plan for future incertitude. For the conventional insurance

Sewa, ILO

industry, the poor and marginalised households do not come under its ambit as they lack

the capacity to save.

2. Obligation of Insurer to

Compared to the mainstream financial sector, the strength of the microfinance sector lies in

its approach of acquiring insight into the clients' limitations and designing systems and

Rural Sector : A notifica-

products in accordance with their social and economic needs, and capacities, which is

tion

applied to the microinsurance sector too.

The recent opening of the insurance sector to private players has resulted in the exploration

3. Livestock Insurance :

of new and hitherto untapped markets and sectors. Private players who are profit oriented

Experience of Lead

and market driven see rural and social insurance as a challenge, and have approached the

N. Radha & Meera

Insurance Regulatory and Development Authority (IRDA) for relaxing the rural and social

obligation norms.

4. Golssary of Insurance

Despite the entry-level constraints in insurance which make provision of insurance services

Terms

beyond the capacity of even the self-sufficient and viable MFIs, continuous efforts are made

by the MF sector, in exploring various permutations and combinations for making their

clients accessing these services. MFIs entering the microinsurance sector need to exercise

5. List of Insurance

caution regarding the complexities and sophistication of the insurance products and their

Comapnies

delivery. The MFIs check list should be- existence of potential market, how to meet the

demand through strategic partnerships, assess the resource requirements (finance and

6. Sa-Dhan Events

skills), whether the clients want assistance in reducing vulnerability to risk, whether insurance

is the most appropriate instrument for risk protection, willingness and ability of the clients

to pay for insurance services.

Claim management and investment management are two crucial aspects of management.

MFIs need to ensure that they have sufficient systems and staff to handle the products.

Insurance requires actuarial science to estimate future losses, establish underwriting criteria,

and reserves. Coordination and communication of all insurance activities within the

Edited by :

organisation is necessary to guarantee that the viability of the insurance product.

Mathew Titus

Though the microinsurance sector is still at the contemporary experimentation stage in

Consulting Editor :

developing insurance products, with the growth of institutional scale and the trend in MF

Ms. Janaki Turaga

sector to mobilise voluntary deposits from the poor, the sector has already attracted the

attention of the regulatory bodies. MFIs are subject to regulation both from microfinance

and microinsurance agencies.

For Private Circulation Only

At the recent 'Policy Prioritisation' workshop organised by Sa-Dhan, two major concerns

which emerged were-the limited role of the formal insurance sector, and the capacity

Published by :

building requirements of the MF sector in providing insurance services.

Sa-Dhan

This issue of Sa-Dhan newsletter shares the experience of two organisations-LEAD, and

B-4/3133 Vasant Kunj

SEWA, in developing microinsurance products for the poor thereby enabling and

New Delhi-110 070

empowering them to handle future uncertainties.

Telefax : 011-613 2629

E-mail:sa_dhan@mantraonline.com

Mathew Titus

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