The role of risk

Microinsurance provides poor and low-income households with the means to protect themselves against the effects of risk. The role of microinsurance must be viewed alongside government provision of basic health services, fire fighting services, employment and education, etc., all of which go towards alleviating poverty.
There are many microinsurance schemes around the world today, but they still only meet a fraction of the overall need. Although microinsurance schemes have become self-sustaining, many still rely on receiving essential support in the form of grants and technical assistance.

For microinsurance to become successful – for both policy-holders and insurers – several elements are important. These include simple and affordable insurance products reaching large numbers of people; stream-lined administration, premium payment; simplified claims; management; and prompt delivery of benefits. All are important to provide "real value" to the target audience.

Microinsurance can also be a tool to extend social protection in the context of  providing security to populations in developing countries and contributing to poverty alleviation. Overall, strategies and mechanisms should ensure that microinsurance is not approached in isolation, thereby maximizing impact.