Posts Tagged ‘Microinsurance’

Microinsurance Partnership in Sri Lanka

Monday, September 21st, 2009

Microinsurance protects very small enterprises against financial ruin from events such as medical emergencies, drought, flood and other natural disasters. Such disasters occur frequently in the developing world; a mudslide in an urban center can eliminate whatever modest shelters slum dwellers had built. Vulnerability to such risks keeps people trapped in the vicious spiral of poverty. They lack basic social protections or any kind of safety net. And as we know from our experience in the U.S., relief aid rarely trickles down.  Microinsurance is complementary to microfinance (the provision of credit) and plays an important role in development.  In Sri Lanka, where less than 1% of the country’s 19 million citizens are covered by insurance, there is strong market potential.  To develop this sector, Janashakthi Insurance PLC announced a partnership with Hannover Re, one of the world’s largest reinsurers, with 8 billion Euros in annual premiums. It will be interesting to see how this market develops and if such products can be successfully exported to low-income entrepreneurs in the developed world.