The Demand for Microinsurance in Pakistan

Publication Date: Mar 2006
Published by: Microfinance Opportunities
Document Type: Case Study

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What are the risks faced and risk-management techniques undertaken by microfinance clients?

This report presents the results of a microinsurance demand study undertaken by Microfinance Opportunities on behalf of the Pakistan Microfinance Network (PMN). The study sought to learn about:

• the risks that microfinance clients in Pakistan face,
  
• the risk-management techniques that they use to mitigate those risks.

The report presents findings regarding:

• Risks:
  
  • Death of a family member;
    
  • Prolonged illness;
    
  • Business loss or failure.


• Key economic stressors:
  
  • Construction of a house;
    
  • Marriage, education and birth of a child.


• Coping mechanisms:
  
  • Borrowing from family members and friends;
    
  • Savings;
    
  • Loans from MFIs;
    
  • Liquidation of assets;
    
  • Borrowing from moneylenders;
    
  • Ignoring the situation.

The report further profiles various micro insurance products available in Pakistan. It concludes that:

• The ability to offer microinsurance products presents MFIs with an opportunity to tap into a larger market of low-income people;
  
• Individual MFIs should conduct market segmentation to identify sub-groups within their respective clienteles before they design product prototypes;
  
• Since MFIs provide insurance companies with access to a large, untapped market, they should participate more actively in further studies and the microinsurance product development process.