What western economic systems can learn from micro-insurance and micro-credit
The concept of micro-credit has been praised throughout the past years, leading even to a Nobel Peace Prize for one of the founders of a successful micro-credit scheme.
One of the recent discussions in the “micro” segment is the one lead about micro-insurance. Such models are supposed to provide affordable insurance for the informal sector in different areas such as health or agriculture. Most of the time, these insurance schemes are realized as group policies on a community base.
As one of the members of the BRIC states, India has reclaimed the “Health for All” aim. Given that neither the private supply of health facilities nor the public ones have been able to significantly bridge the gap in health insurance for the poor, micro-insurance plays an important role for being able to achieve this goal.
Their trait of being community based implies that every action of a member has consequences for the group as a whole. The premiums of every member are collected in a common pot and used in the case of the incidence of risk. This requires a high responsibility of every individual involved. The concept not only enables insurance for a part of the population which was seen as uninsurable, but also weakens or even avoids aspects such as fraud, moral hazard or adverse selection.
