Micro Insurance in India

Publication Date: Oct 2002
Published by: International Labour Organization (ILO)
Document Type: Case Study (Microsoft Word)

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A look at the micro-insurance scenario in India

This paper focuses on micro-insurance schemes of microfinance institutions (MFIs). The paper also surveys micro- and small-entrepreneurs in order to:

• Understand and estimate the risks they face;
• Identify their risk cover needs;
• Propose actions that MFIs can take to address these needs.

The paper has the following objectives:

• Map the micro-insurance landscape and establish knowledge on a regulatory framework for the insurance industry in India;
• Identify the details of insurance activities concerning the operations for the provision of insurance services and isolate the difficulties that they face;
• Examine the demand for insurance from micro- and small-enterprises (MSEs).

The paper uses the following research techniques:

• Personal interviews and focus group discussions with about 120 microfinance clients;
• Discussions with four MFIs offering insurance as a serious product line;
• Interactions with various stake-holders including insurance companies and the government;
• Analysis of secondary data from available secondary information.

The paper concludes with lessons learnt about insurance by various insurance companies. These include:

• Insurance companies are capable of drawing-up flexible procedures if they are convinced about the genuineness of the operating organization;
• Strong interpersonal relationships result in good customer care from the point of view of the MFI;
• Competition in the insurance environment results in the very best product at affordable rates and increased negotiating power for the MFI;
• Combination loans mitigate risk.