Micro insurance: Tool to fight poverty ––Expert

An insurance expert has opined that if micro insurance is given its rightful place in the poverty alleviation crusade, it could help  in uprooting completely poverty in African societies. Dr Mike Ikupolati, Chartered Insurance Practitioner and Director- General/ Head Of Mission, West African Insurance Institute, Kotu South, Banjul,  who revealed this, noted that the poor had in the past developed informal and non insurance mechanism to fight poverty.

According to him, all over the world, insurance has been found to be a major player in the socio economic development of societies and more recently in the strive towards poverty eradication in west African societies stressed that insurance in West Africa cannot be an exemption.

Highlighting some of the non-insurance and informal mechanisms developed to provide protection against risks, Ikupolati said diversifying income sources, building assets by saving money, stocking food and investing in housing and healthcare, strengthening social networks, participating in reciprocal borrowing and lending systems, welfare associations and other informal group-based insurance systems had not been able to end poverty.

“In West Africa , people had tried “OSUSU” as a means of providing for unforeseen contingencies.

Unfortunately, these have proved inadequate and have retarded economic growth and social mobility.

Many elderly people live in poverty due to limited access to pension plans and saving facilities.

“These are the specialties of micro-insurance products today.  Since loan facilities are increasingly impossible to access by the poor, the Micro-Insurance principles take cognizance of the situation of the poor and hence created products and services that are at the reach of the poor.

“Micro Insurance is a financial arrangement to protect low-income people against specific perils in exchange for regular premium payments proportionate to the cost of the risk involved

“Most community financing schemes have evolved in the context of severe economic constraints, political instability and lack of good governance.  The common future within all is the active involvement of the community in revenue collection, pooling resource allocation and frequent service provision.

Micro insurance, like insurance, functions on the concept of risk pooling,  regardless of its small unit size and its activities at the level of single community.

He, however, noted that for insurance practitioners to thread successfully in this unpopular road, they must be ready to face some obvious challenges.

According to him, the challenges of micro insurance in West Africa are many.  “It is vital to know that our local conditions are unfavourable, Premium income is low, administrative costs are relatively high and infrastructure for insurance support is lacking.

Source : Tribune