Insurance and Inclusive Growth

This paper aims to demonstrate that the insurance sector can contribute at a basic level to inclusive economic growth and also increase the effectiveness of the credit function. It shows that microinsurance can have positive effects of health utilization, income maximizing investment strategies for poor farmers, and the elimination of certain types of poverty traps. The basis for this paper is the literature review of relevant research and it covers the following sections in detail:

• Theoretical basis for the existence of insurance markets and the causative links from insurance sector development to inclusive economic growth;
• Survey of the recent empirical studies of the insurance-growth nexus;
• Review of the recent theoretical and empirical work on the role of insurance in reducing the incidence of poverty and helping poor families to increase income, consumption, and assets;
• Challenges in the sector with a focus on scaling up microinsurance pilots, enhancing value and efficiency in delivery, applying new technologies, avoiding disproportionate regulations that create barriers to inclusion, and improving health outcomes;
• Growth impacts of rapid onset natural disasters and the role of insurance in sustaining growth after such natural macro shocks;
• Factors influencing insurance sector development and improving access to mainstream insurance markets.