Micro insurance caters to needs of poor in Bangladesh
Sunday, 6 December 2009
WASHINGTON-Insurance products are a way of life, protecting companies and people's interests from cradle to death and alleviating much of the risk that could rise to nightmarish proportions.
The list is endless-life insurance, health insurance, disability insurance, homeowners insurance, car insurance, house insurance, export insurance, fire insurance, flood insurance, luggage insurance, travel insurance, and even insurance on insurance.
There is a relatively new insurance product called micro insurance, which caters to the poor in developed and developing nations. Micro insurance covers many of the same risks as regular insurance products, at less cost and with smaller payouts, but is affordable to those near or living in poverty.
"People work themselves out of poverty using micro lending; micro insurance helps prevent them from falling back into it," said Dirk Reinhard, vice chairman of the Munich RE Foundation, the not-for-profit risk management educational arm of the German reinsurer, in a Knowledge @ Wharton (KW) report on micro insurance.
"This isn't about the poorest of the poor, but the working poor who have something to lose. They have an income but are hovering around the poverty line, so that if their crop fails, they get sick, or their shop burns down, they have to start from zero again," Reinhard said.
"Micro insurance has been a hard sell among the world's poor," according to KW.
KW explains that most of the poor have not encountered any insurance programs in the past. Many do not want to use the little resources they have for insurance, which does not have a tangible benefit. Also, those less fortunate may not have the educational attainment to understand how the micro-insurance program works and how to access it.
The majority of the world population lives in developing markets, but less than one-tenth hold any type of insurance coverage, according to KW.
Bangladesh, a country with thousands of microfinance establishments catering to the poor, has only 11 licensed life insurance firms.
Earlier this year, the Asian Development Bank (ADB) provided a $2 million grant administered through the Japan Fund for Poverty Reduction, hoping to develop micro-insurance programs in Bangladesh.
"Risks that would mildly affect middle class households are a significant setback for the poor and often push them deeper into poverty," Mayumi Ozaki, finance specialist at ADB, said in a statement. "Problems like illness, fire, or theft can severely set back efforts to ease poverty. Without insurance, the poor resort to borrowing from informal sources, withdrawing from their savings, or selling assets to cope with these shocks."
Source-Epoch Times, New York
The list is endless-life insurance, health insurance, disability insurance, homeowners insurance, car insurance, house insurance, export insurance, fire insurance, flood insurance, luggage insurance, travel insurance, and even insurance on insurance.
There is a relatively new insurance product called micro insurance, which caters to the poor in developed and developing nations. Micro insurance covers many of the same risks as regular insurance products, at less cost and with smaller payouts, but is affordable to those near or living in poverty.
"People work themselves out of poverty using micro lending; micro insurance helps prevent them from falling back into it," said Dirk Reinhard, vice chairman of the Munich RE Foundation, the not-for-profit risk management educational arm of the German reinsurer, in a Knowledge @ Wharton (KW) report on micro insurance.
"This isn't about the poorest of the poor, but the working poor who have something to lose. They have an income but are hovering around the poverty line, so that if their crop fails, they get sick, or their shop burns down, they have to start from zero again," Reinhard said.
"Micro insurance has been a hard sell among the world's poor," according to KW.
KW explains that most of the poor have not encountered any insurance programs in the past. Many do not want to use the little resources they have for insurance, which does not have a tangible benefit. Also, those less fortunate may not have the educational attainment to understand how the micro-insurance program works and how to access it.
The majority of the world population lives in developing markets, but less than one-tenth hold any type of insurance coverage, according to KW.
Bangladesh, a country with thousands of microfinance establishments catering to the poor, has only 11 licensed life insurance firms.
Earlier this year, the Asian Development Bank (ADB) provided a $2 million grant administered through the Japan Fund for Poverty Reduction, hoping to develop micro-insurance programs in Bangladesh.
"Risks that would mildly affect middle class households are a significant setback for the poor and often push them deeper into poverty," Mayumi Ozaki, finance specialist at ADB, said in a statement. "Problems like illness, fire, or theft can severely set back efforts to ease poverty. Without insurance, the poor resort to borrowing from informal sources, withdrawing from their savings, or selling assets to cope with these shocks."
Source-Epoch Times, New York