Last year, Forbes magazine ran an op-ed piece recognizing microinsurance as a way for the financial services sector to diversify and support itself during the global economic crisis. The op-ed concluded saying, “And most important: Done right, microinsurance is a rapidly expanding and highly profitable business.” Those in the business world may be concerned about the bottom line, but there are also widely-recognized social benefits.
Like microfinance, microinsurance enables the poor in developing countries to access key services. According to the Digital Journal, “Farmers will take chances with new seed stocks; or people who have been devastated by natural disasters such as hurricanes, floods or other catastrophes will no longer have to lose everything. And should people wish, they can purchase life insurance, which would help pay for the rising costs of funerary services.” The Leap Frog Financial Inclusion Fund is hailing the recent boom of microinsurance as the a major breakthrough. The Fund will start providing these insurance products to an estimated 25 million low-income people in Africa and Asia. With over an estimated one billion living in extreme poverty, microinsurance seems like a win-win situation.