The Indian microfinance industry, has been a strong enabler in including the financially underserved and unserved in the formal financial ecosystem. In fact for microinsurance to reach the remotest corner of the country, technology will be key. Falling prices of mobile broadband and the increasing availability of 3G, the new generation of wireless technologies, are expected to improve internet access considerably in coming years. Advancements, such as satellite data, Global Positioning Systems (GPS) and point of sale terminals, have the power to improve micro insurance in a variety of ways. Technology is supposed to drive the development of financial services in two ways: by cutting costs, and bridging physical distance.
The most common type of microinsurance, is life insurance. Widely viewed as the simplest type of microinsurance, life coverage is in some ways quite complex and varied. So far MFIs are only focusing on recovering their loan amount and not looking at utmost client protection from all aspects of socio economic background. The MFIs could look at developing a combined package by getting approval at the policy level from IRDA, benefitting both the end consumers as well as the MFIs.
Health micro-insurance referred by different names such as community-based health insurance, micro-health insurance, mutual health insurance, community-based health financing, community health insurance etc. is a form of micro-insurance in which resources are pooled to mitigate health risks and cover health care services in full or in part. Health micro-insurance schemes are quite complex in nature compared to life insurance schemes, as they provide services towards specific risks or illnesses and involve the role a health care provider, whether independent of or in partnership with the scheme.Health micro insurance is important for the poor because health risks are often identified by the poor as the greatest and costliest risks among all other natural, social, economic risks faced by them. Health problems not only impact expenditureof the household, but also reduce the productivity and lessen the opportunity for growth.
Insurance protects against loss of or damage to crops or livestock. It has great potential to provide value to low-income farmers and their communities, both by protecting farmers when shocks occur and by encouraging greater investment in crops. However, in practice its effectiveness has often been constrained by the difficulty of designing good products and by demand constraints.Agriculturalinsurance can indemnify policyholders for losses which can include Hut, Cattle, Coconut, Seed Crop, Pumpset, etc.although most of them have been exempted from GST to help affordability, such indemnity products are relatively rare due to the high costs of administration and the risk of fraud. Agricultural microinsurance is index-based, providing farmers with payouts tied to the performance of an index (such as a rainfall gauge), rather than insuring them for crop losses actually experienced.
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