Ramesh S Arunachalam
Rural Finance Practitioner
What factors continue to affect the demand and supply of micro-insurance in India?
As has been argued by several stakeholders[i] (in several forums and publications), the following key factors seem to impact the demand and supply of micro-insurance in India. The major factors include:
1. Low and Limited Present Coverage
2. Low Willingness to Buy Insurance
3. Exclusion of social sectors
4. Low Awareness and Gaps in Understanding Concepts and Procedures
5. Managerial and Operational Capacity Gaps
6. Challenges in Design of Insurance Products
7. Pricing Issues
The Table below highlights the specific issues with regard to these factors given above
Without question, the above challenges/factors have to (and can) be addressed, if low income people are to gain access to vulnerability reducing financial services and get financially included in a true sense of the word.
And while insurers assisted by MFIs/NGOs and supported by an enabling environment have begun to do so, much more needs to be done and it is hoped that the Indian micro-finance industry tries to focus more on such aspects rather than just micro-loans…
Have a Nice Day!
[i] This is a compilation of ideas, lessons, inferences and other good/practices from the following studies and is gratefully acknowledged: Anuradha Rajivan et al (2007), “Building Security for the Poor - Potential and Prospects for Microinsurance in India” by UNDP; NCEUS Report (2006) “Social Security for Unorganised Workers”, New Delhi; Arunachalam, Ramesh S et al (2007), Life at Bottom of Pyramid, Forthcoming; Arunachalam, Ramesh S (2007) et al, Enhancing Financial Services Flow to Small Scale Marine Fisheries Sector, A Study for FAO/UNTRS; Arunachalam, Ramesh S and Girija Srinivasan (2001), Micro-Insurance in India, Report for SIDBI, Lucknow; Arunachalam, Ramesh S and Girija Srinivasan (2001), Micro-Insurance for Low Income Women Enterprises, Report for ILO, Geneva; Arunachalam Ramesh S, (2007) “Micro-Pensions in India A Study for CORDAID”, Netherlands; Arunachalam, Ramesh S (2007) et al, “India Country Scan for Financial Services Design/Delivery to Low Income People”, MicroNed, Netherlands; Arunachalam, Ramesh S (2007), Financing for Gender Equality, Commonwealth, UK; and Swainson, Jeremy and Ramesh S Arunachalam (2006), “ Distribution Models in Insurance: An Global Analysis of Models from 14 Countries”, Enterplan, UK; and CGAP Good and Bad Micro-insurance Case Studies and Various Other Resources and Discussions; and Several other public domain documents.