Insurance helps people manage unexpected events in return for payments proportional to the likelihood and level of a specific risk. Though poor households often face greater risks than the rest of the population, they have less access to formal insurance to protect themselves against these risks, which may include the death of the family breadwinner, severe or chronic illness in the family, or the loss of an asset, including livestock and housing.

As microfinance institutions expand beyond credit to a broader array of financial products, they are becoming more interested in offering clients insurance products in partnership with insurance companies. While commercial insurers provide the majority of the world’s products, mutual, cooperative, and other community-based or community-led insurance organizations are emerging as microinsurance providers. The greatest challenge for microinsurance schemes is finding the right balance between adequate protection and affordability to deliver real value to the insured.

A woman smiles next to her livestock. Photo by Probal Rashid, 2013 CGAP Photo Contest