Microinsurance in Africa


The risks faced by low income people are the same as those faced by the rich people. However, these risks have greater financial impact and occur with greater frequency among the low income people. The vulnerability of low income people is exacerbated each time they incur a loss. Key risks include; death, illness or injury, loss of property (through fire or theft), natural disaster (earthquake, drought). Recurrent climate hazards challenge farmers in developing countries. Reliance on various diversification and traditional risk sharing among kin and families has had serious limitations; low income households are vulnerable to risks and economic shocks. One way for the low income people to protect themselves is through insurance.

Microinsurance is the protection of low income people against specific perils in exchange for regular premium payment proportionate to the likelihood and cost of the risks involved. It is the use of insurance as an economic instrument…

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