Index Insurance Forum

What is the link between index-insurance and microinsurance?

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Microinsurance is the protection of low-income people against specific perils in exchange for regular premium payment proportionate to the likelihood and cost of the risks involved. This definition is exactly the same as one might use for regular insurance except for the clearly prescribed target market: low-income people. Given its focus on low-income people, microinsurance usually differs from regular insurance in terms of types of risks covered, types of delivery channels, premiums level and types of claims documentation requirements.

Microinsurance can cover a variety of risks, including death, illness, property, or crop loss. When index-insurance is sold to low-income people such as smallholder farmers (See GIIF projects with small-scale farmers in Senegal  and Benin) or micro-entrepreneurs ( See GIIF projects with microentrepreneurs in Haiti, MiCRO). It often takes the form of microinsurance with business models explicitly targeting the low-income population. Sometimes, index-insurance regulations are part of the microinsurance legal and regulatory framework (See GIIF project with CIMA code).