The Health Risks of the Poor and the Emergence of the Micro-Insurance Sector in India

A leading solution for such difficult situations mentioned above is micro-insurance. Micro-insurance in India is an emerging phenomenon. With the remarkable success of the microfinance movement, it is expected that the country will provide one of the largest markets for the micro-insurance market. Micro-insurance is an element of social protection where low-income people are offered insurance services through a collective pooling of resources. Its implementation is based upon the fact that the poor are bankable and have the ability to make small contributions for the security of their future. The microfinance model has confirmed the financial participation of the poor, but the financial sustainability structure is not complete with only savings and credit operations; they need to be strengthened with micro-insurance for long-term sustainable growth. Millennium Development Goals also put an emphasis upon extending social protection mechanism for the poor as it contributes towards eradicating poverty, enabling better education and ensuring access to basic healthcare services.

India is the first country to make it mandatory for private insurance companies to provide services to the poor by covering them under various micro-insurance schemes offered at low, flexible premiums. Besides, there are substantial experiences at the non-governmental level, such as the SEWA in Gujarat and Yeshasvini Rural Micro-Health Insurance Scheme in Karnataka, where local resources have been successfully pooled together to set up corpus funding to provide healthcare services for the poor by the poor. There have also been instances of collaborations between nonprofit organizations and private insurance companies to render professional insurance services to the poor at affordable rates.

However, it is yet to be seen how successful the micro-insurance model can be. With diversification at every corner of the country, the need is to implement tailor-made products for the poor inhabiting varied environments. Besides, empowerment should be a necessary protocol when working with the poor; they should be completely equipped with the knowledge about insurance products and services and should be able to make decisions about them. An ideal micro-insurance model is one where the poor have the power and participation to locally manage the pooled resources together.

(The article is copyrighted. To contact the author, email us at info@fundsforngos.org)