Microinsurance in Rajasthan: Issues, Experiences and Challenges (Workshop Report)
This report on the Centre for microfinances workshop, highlights the need for microinsurance to be better integrated within the microfinance sector in Rajasthan, India, given the states diverse geography.The workshop, held in April 2006, concluded with numerous recommendations for promotion and implementation of micro-insurance in Rajasthan. The same is outlined below:
- Why is microinsurance necessary?
- The poor are typically more vulnerable to disease, famine, and death, and are at high risk of losing assets as they would not have the money necessary to cope with an emergency or disaster-insurance would help reel the poor out of the poverty cycle.
- Constraints: Insufficient data on poor peoples consumption and savings patterns in Rajasthan makes it more difficult to adjust product design and pricing for poor clients;
- Developments and information:
- Regulation in the state has become more favorable and less stringent, making it easier to offer insurance services to the poor;
- Health and accident insurance actually represent the greatest demand for insurance services.
- Insurance implementation methods:
- The partner-agent model: Similar to on-lending credit;
- Full service insurance model: MFI-insurance company responsible for all aspects of providing the service.
Some lessons learnt:
- The rural poor need to be taught the procedures of filing claims, and general insurance paperwork and documentation;
- NGOs cannot link up with banks alone as administrative costs are too high and cannot be covered only by premiums;
- Health care prevention methods is one way to improve health - this can be part of awareness packages while offering insurance services.