Micro-Insurance for Natural Disasters Concepts, Present and Future Outlook

Abstract eng:
Catastrophe risk transfer through insurance and reinsurance has been widely used in developed parts of the world for the past two decades in an orderly fashion. The scientific and technological basis for the quantification of risk over this time has made the available insurance/reinsurance products quite robust as well as universally adapted. Unfortunately, these products are mainly used in developed parts of the world due to the level of catastrophe risk and the premium structure. Thus, the modern knowledge of quantification and understanding of catastrophe risk has not been of great benefit to many in developing parts of the world. It is well known that after each catastrophic event, it is the poor who are impacted the most. Due to extremely low level of risk (in monetary terms) of these poorer sections of any society, the insurance/reinsurance industry has not paid much attention to helping them. Thus, a typical rural farmer who may lose his “hut” and his means of generating income after a disaster is completely devastated since he and millions like him are not covered by any insurance. Catastrophe Micro-insurance as a concept and as a potential product is targeted for such people. It is estimated that almost a billion individuals who are at risk due to natural or man-made catastrophe events do not have any risk transfer mechanism. Because of the size of these potential aggregate losses from such poorer sections of the society, the governments (of developing countries) do not have the resources to help these people. Micro-insurance may be the means by which such market can be developed and helped. This paper explores possible strategies for implementing sustainable micro-insurance schemes and provides an example of one such scheme being implemented in Sumatra, Indonesia.

• Export as: BibTeX | MARC | MARCXML | DC | EndNote | NLM | RefWorks
• Add to your basket