Indian Insurance of Jewelry Basic Need

 Insurance of Jewelry Basic Need.
By Aamir Mannan.

Micro insurance: Demand and Market Prospects – Lao PDR

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In India, the study finds that this country currently has the most dynamic micro insurance

sector in the world. Liberalization of the economy and the insurance sector has created new

opportunities for insurance to reach the vast majority of the poor, including those working in the

informal sector. Even so, market penetration is largely driven by supply, not demand.

Microi nsurance in India has valuable lessons for rest of the world, particularly in the regulati on

of the industry. Certain aspects, such as the quota system need further and closer analysis. The

quota system, for example, may be viewed in terms of its costs and benefits: is it an onerous

obligation for insurers that creates a barrier to innovation a nd demand-based products? Or, is it

an avenue that may lead to the creation of a micro insurance market that meets the needs of the

poor and disadvantaged?

In Indonesia, demand is strong for insurance to cover the risks that people are least prepared

for and have insufficient means to manage. Such risks include serious illness, poor harvest, death

in the family and social obligations. Education of children is a priority, and the potential

micro insurance policy holders would like to ensure that an unfo resee n shock or stress does not

deprive their children. The number of insurers in Indonesia is significant, yet few have e x plored

the low-income market. Consequently there is a critical need for capacity development, primarily

in the areas of agent training and market education. This could expand opportunities and lead to

market-based tools to assist the poor in securing their lives.

In Lao PDR, the country study finds that the social security system is nascent (and practically

absent for the informal economy) and micro finance institutions are conspicuously inadequate.

The analysis confirms a commitment by the Government in several relevant areas: support for

reforms, support for pensions and a social security fund for public employees, support for

compulsory social protection for the private sector, and support for a community -based health

scheme for people working in the informal sector. The study concludes that the potential for

commercial micro insurance is in the future at least a few years away. Meanwhile, f or

microi nsurance to become viable, the Government will need to strengthen the financial

infrastructure, develop capacity for potential insurance providers and build knowledge of

micro insurance mechanism and products among potential policy holders.

Micro insurance is a low-price, high-volume business and its success and market sustainability

is dependent on keeping the transaction costs down. Hardly any satisfactory state -run programe

of insurance benefits is now available for poor population groups, peopl e working in the

informal sector and other disadvantaged individuals —and private-sector programes are even

rarer. A number of constraints make micro insurance look unattractive, including a lack of

political will, scarcity of public funds and absence of a viable business model. The costs of

marketing and processing appear to be too high and, in view of the extremely low purchasing

power of the consumer base, it cannot be easily apportioned to the target group. Such constraints

make micro insurance unattractive at the cursory level. Market analysis suggests that progress can

be made particularly when public and private sector work together in generating demand -based

and innovative products.

Future steps

Where do we go from here? Building on the recomendatio ns of the studies, pilot activities in

India and in Indonesia are being implemented by Allianz AG supported by GTZ on behalf of the