What is Microinsurance?

By David M. Dror and David Piesse · Microinsurance Network and Micro Insurance Academy · 2014

Study guide: Exam 6I

Chapter 2 of A Practical Guide to Impact Assessments in Microinsurance, defining microinsurance by its two aspects — what constitutes insurance, and what is micro in microinsurance — through the target group, the product and the process. It describes the business models that deliver microinsurance, why it is an important risk management tool for low-income people in developing countries, and the challenges it faces in regulation, technology and risk management.

On the syllabus

• Exam 6I — objective A2; pp. 23–39.

2.1 Introduction

• Latest estimates put microinsurance clients in the developing world at some 500 million; about 70% of microinsurance schemes are operated in Asia, historically concentrated in India and West Africa.
• Products cover health, life/funeral, disability, agriculture (crop-based weather index and livestock), property, credit life and disaster risks.

2.2 What is microinsurance?

• 2.2.1 Definition of insurance
• 2.2.2 Defining the micro in microinsurance
  • 2.2.2.1 Micro as characteristic of the target group
  • 2.2.2.2 Micro as characteristic of the product
  • 2.2.2.3 Micro as characteristic of the process
  • 2.2.2.4 What micro is not
  • 2.2.2.5 Common characteristics of microinsurance definitions
• Common features of the definitions: microinsurance is insurance and applies principles of risk pooling, suits people on low incomes, targets people in the informal sector, and is independent of the class of risk.

2.3 Business models for microinsurance

• At least four operating business models: the partner-agent model, the provider-driven model, the charitable insurance model and the mutual/cooperative insurance model; in reality schemes are often combinations of these and can change over time.

2.4 Why is microinsurance important?

2.5 Challenges to microinsurance

• 2.5.1 Regulation
• 2.5.2 Technology
• 2.5.3 Risk management

2.6 Conclusion

• The chapter has illustrated three ways to approach microinsurance — focused on the target group, the product or the processes — and whatever the approach, the guiding principles of outreach and sustainability remain the same.

Sources

• What is microinsurance? (David M. Dror and David Piesse, CAS copy) — the document: the chapter title page ("What is microinsurance?", the authors, chapter number 02), the numbered headings, and the text of sections 2.1, 2.2.2.5, 2.3, 2.4 and 2.6, printed pages 23–39 (sha256 dcf12612c6f2bcf8…); the final page is blank. The PDF does not name the book, its publisher or its date, which are taken from the content outline
• CAS Exam 6I Content Outline, Fall 2026 — the citation (Chapter 2 in A Practical Guide to Impact Assessments in Microinsurance (preliminary version), Microinsurance Network and Micro Insurance Academy, May 2014) and the assignment (objective A2; pp. 23–39)