People at the bottom of the pyramid are more susceptible to the long-term impacts of emergencies and life crises due to the lack of low-cost insurance coverage.  In response to these needs, several new insurance products for the poor and uninsured have developed.  Microinsurance provides a range of insurance services, covering health, property, personal injury, livelihood and life insurance.  These are basic coverage plans with low premiums that are sold to poor people who often have never had insurance before.

Credit Microinsurance

The most common form of microinsurance, giving insurance coverage to people who have taken out microfinance loans.  This coverage only lasts until the loan is repaid and is often mandatory for the borrower.

Crop Microinsurance:

Groups of farmers are able to protect their crop yields from weather such as droughts and floods, and sometimes price fluctuations. In countries like India with constant problems of drought or flooding, crop insurance makes sure farmers have a reliable source of income.

Crop Microinsurance India
A group of Indian women preparing their land before the rain. Photo courtesy of BASIX.

Health Microinsurance:

Linked with local healthcare providers, it offers inpatient or outpatient coverage.  This gives coverage to low-income families that cannot afford or are currently not included in the healthcare insurance system.  These microinsurance plans have started in developing countries, because many deaths are due to preventable and curable diseases.  With small amounts of coverage, deaths decrease and families are more likely to improve their standard of living.

Health Microinsurance
Beneficiaries of an outpatient and hospitalization insurance programme in Kenya. Photo courtesy of K-Rep Bank.

Mobile Systems:

There are new forms of life, health, accident and agriculture insurance offered through mobile phone usage, with coverage based on the amount of airtime a customer is using. MicroEnsure has launched a series of life insurance products with mobile phone providers in Ghana, which provides increased coverage for funeral expenses (an average funeral in Ghana is USD 10,000) as customers use more airtime.

Read more about MicroEnsure

Friendly societies and cooperatives:

Institutions that provide a wide range of insurance products to their member group.  These groups are typically formed based on interest, gender, religion, or geographic location.

Prime Islami Life Insurance Ltd. is a provider of takaful, Islamic insurance that provides reimbursements to members in times of need, provided that they regularly donate to the group fund.  Takaful is managed in accordance with Islamic law, and provides coverage for these groups that would otherwise be uninsured. Prime Islami Life Insurance Ltd. has expanded their micro-takaful insurance products to provide coverage for the poor of Bangladesh.

Read more about Prime Islami Life Insurance Ltd.


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