Description

Micro-insurance schemes are risk-pooling instruments intended to protect poorer more vulnerable households against existential risks, particularly those working in the informal sector, against events such as loss of income or fire. They are characterised by low premiums and comparatively low claim payouts. They may supplement, not replace a standard social insurance scheme.

Important is the use of standardized claims forms and claim payouts, as they are not based on an assessment of each individual case but on the occurrence of a particular event, i.e. the index. The insurance provider does not insure an individual’s risk but particular values in the region’s predefined index.

Requirements

• (Emerging) Insurance industry
• A properly functioning country-wide administration and monitoring system with access to the relevant information and sufficient technical and human capacities for its design, implementation and monitoring
• Close cooperation and knowledge sharing with farmers' organisations
• Open-access to all farms, regardless of size and location
• Skilled / specialised personnel to man the respective institutions / provide the respective services

Possible Negative Effects

• Regional indexes could be fraudulently calculated