Developing people economically requires insurance. Just as micro-finance turns banking on its head, so does micro-insurance. It turns insurance on its head.
Micro-insurance is the cousin to micro-finance. These two concepts are related. In the developed world credit is the basis for its existence along with insurance products. Similarly, in the third world, micro-credit should become part of the financial structure with micro-insurance offered to ‘cushion’ it.
Providing insurance to the poor is called micro-insurance, similarly as micro-credit is providing loans to the poor.
To give the poor the same opportunity we must make insurance available to them. Smalls loans can be defaulted upon due to illness, death, weather patterns and unforeseen circumstances, therefore we must guarantee against such circumstances.
Micro insurance also provides a guarantee to the financial sector that their investments would not be lost.
Faith and Community based organizations, churches and non-governmental agencies can play an important role in micro insurance. The infrastructure for insurance in poor places are slim and in some cases non-existent. The use of present infrastructures that cater to the poor can help make micro-finance viable in those areas.
Munich Re, CGAP are jointly working on annual conferences to build micro-insurance awareness.
Some companies are taking the lead in building up technology and academic studies so that the micro-finance field can have a strong footing.
Extreme weather-patterns can be devastating to the poor. Poor areas of the world are victims of a visions cycle of devastation, because there is no insurance available to ‘cushion’ against losses due to weather patterns.
Micro-insurance would reduce the risk associated with adverse weather patterns.