Microinsurance has turned out to be an important financial product for many Microfinance institutions (MFIs). Microinsurance is normally sold under a partner-agent mechanism, an agreement between insurance companies and MFIs, with the latter acting as delivery channels. Microinsurance still has a very low penetration, especially in market segments of low income households and, moreover, in rural areas. Currently, microinsurances refer especially to life insurance, and are linked to loans, more with the objective to reduce credit risk. Agriculture and livestock microinsurance is even less commercialised since the high inherent risk and costs related to these activities pose difficulties for financial institutions as well as for insurance companies going into this market sector.
Frankfurt School of Finance & Management