Together supporting microfinance
and microinsurance in the South

Microinsurance

It is the poorest who often need microinsurance the most.

Why spend money on insurance if you have almost nothing?

People who require insurance the most have the least money to pay for it.

Poor people are very vulnerable. A failed harvest, excessive rains or long periods of drought, illness or a death can mean that a household’s income suddenly drops, that the business has to be closed down, that the children can no longer attend school, that the loan cannot be repaid.

The smallest setback can cause significant problems for poor people with as a result the risk that they fall below the poverty threshold.

What does microinsurance offer?

Microinsurance can cover various types of risks. In practice microinsurers mainly offer two types of insurance:

  • Health insurance whereby the clients, who are often members of a healthcare fund, only have to pay a small share of their medical costs themselves. The insurance pays the rest of the costs.
  • A credit insurance which is linked to a microcredit. This insurance means that if a borrower dies, his or her family will not have to repay the amount that was borrowed.

Threshold

The threshold for taking out insurance is still very high. It is not easy to convince poor people of the usefulness of insurance.

There are a number of reasons for this: 

  • If you do not have a lot of money it does not seem like a good use of it to spend it on insurance for something that may happen to you in the future.
  • Cultural aspects also play a role: in some African countries, paying for calamities that may befall you is considered the equivalent of causing such calamities to happen.

And yet it is poor people above all who stand to benefit from microinsurance.

Want to know more?


Other projects from Microinsurance

CGAT

Country: RD Congo
Partner: Trias

CIF Assurances Vie Burkina

Country: Burkina Faso
Partner: