Microinsurance

The Microinsurance is a system that uses (among others) the insurance mechanism and whose beneficiaries are at least part of those excluded from formal social protection systems, especially workers in the informal economy and their families . It differs from the systems created to provide legal social protection for workers in the formal economy. Membership is not compulsory (but it can be automatic) and members contribute, at least partially, to the financing of benefits.

The term “microinsurance system” refers to either the institution offering insurance (eg a health mutual) or a set of institutions (in the case of joints) that offer insurance or the insurance service itself offered by an institution with other activities (example: a microfinance institution).

In France, the first microinsurance product was launched by the Entrepreneurs de la Cité association with the First Insurance Toolkit in 2008.

Mechanism

The use of the insurance mechanism assumes:

• prepayment and risk pooling: advance payment of contributions (before the occurrence of risks) which are pooled
• risk sharing: pooled contributions are used to pay monetary compensation to those who are affected by the risks covered by the system, and those who are not affected by these risks do not recover their contributions
• coverage guarantee: financial compensation for a number of risks in accordance with a defined benefit package.

Risks covered

Microinsurance schemes can cover various risks (health, life, etc.); the most common microinsurance products are:

• Micro -life insurance (and retirement savings plans)
• Micro-health insurance (hospitalization, primary health care, maternity, etc.)
• Microinsurance disability / invalidity
• Microinsurance on the property (movable property, livestock, real estate)
• Agricultural microinsurance (including crop & livestock)
• Professional microinsurance