Microinsurance, Poverty and Vulnerability: A Concept Paper

Professor Sayed Moinul Ahsan of Department of Economics, Concordia University, also a visiting scholar to the Institute of Microfinance (InM), presented a seminar titled, `Micro-insurance, Poverty and Vulnerability: A Concept Paper’ at the seminar room of PKSF Bhaban on 2 January, 2009.

With Professor M.A. Baqui Khalily, Executive Director of the InM in the chair, the seminar was attended by researchers of InM, BIDS, and representatives of Palli Karma-Sahayak Foundation (PKSF), different microfinance institutions (MFIs), and other development agencies.

In his paper Professor Ahsan spoke about preponderance of risk and vulnerability facing the poor. In spite of advancement in microcredit, effective coping mechanism for the poor remained limited and consequently, poverty cycles trap many poor households indefinitely. He conceptually explained the risks that matter for life and death events of the poor. He maintained that those risks might be insured at a cost affordable to the insured and the insurers.

Dr. Sazzad Zohir of Economic Research Group (ERG) recognized the necessity of covering risk of poor through some mechanisms, but insisted not to expect more from the MFIs about microinsurance. He also added that what was going on in microfinance in the name of microinsurance was a mechanism to accumulate resources from the poor by the MFIs to use as revolving loan fund in their microcredit program.

Among other issues, reinsurance, rate of premium and actuary to calculate premium also came up in the course of discussion. The un-preparedness of the insurance companies to cover the risks the poor frequently encounter was also mentioned in the workshop. If the MFIs were to take up the venture, they should have legal mandate to do so.

Professor Khalily in his concluding remark told that like microfinance, in microinsurance also the MFIs would have to take the lead if the things were to bring into wider practices in the given situation.

The Institute for Inclusive Finance and Development (InM) is registered as an independent non-profit institution under the Societies Registration Act 1860.
The Institute works for developing the overall capacity of the financial sector and strengthening the links between the financial and real sectors through undertaking research, training, education, knowledge management and other programmes in priority areas including inclusive finance, microfinance, poverty and development.

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