OVERCOMING BARRIERS TO MICRO-INSURANCE FOR CATASTROPHE RISK MITIGATION: LESSONS FROM MICRO-FINANCE OPERATIONS

摘要

A small-scale community-based micro-finance scheme in Andhra Pradesh is used to explore how a micro-insurance scheme might reach low-income households to improve their resilience to future disasters. Data from the ten years of loans administered by the Divi Seema Foundation (DSF) shows that the primary concerns for financial protection are livestock and economically-productive resources. An insurance product that covered several of these key elements would be affordable by the landless households if it were priced within about 1% of income. Estimates of claims costs based on DSF data suggests that certain components, but not everything on the wish-list, could be covered in an insurance product at this price. The economic viability of an insurance scheme in a hazard-prone area like this one would depend on the cost of catastrophe reinsurance. This would probably be too expensive for a small-scale scheme but could be defrayed in a larger scheme. The proposed micro-insurance scheme is viable if it can scale the community administration of DSF.