While inaugurating the Sixth
Global Conference of Actuaries organized
by the Actuarial Society of India the
International Actuarial Association
and the Federations of India Chamber
of Commerce and industries (FICCI) at New Delhi in February 2004, C S Rao, Chairman of the IRDA, mooted the idea of
reaching the rural areas and the
marginal segments through the channel of
Micro insurance . Micro insurance is a
comparatively new concept in the Indian
market. Micro financing refers to
finances that are made available to the
poor and other marginalised sections of
the community to whom no financial support or
insurance security is available ,
either from banks or from insurance
companies . Micro financing comprises micro-savings, micro-credit, and insurance of property and lives as a
bundle of values. The concept of micro
financing as an idea to alleviate poverty
was experimented on a larger
scale in our neighbouring country ,
Bangladesh. way back in 1974, during a
great famine in the country the idea of forming a bank a for exclusive micro-credit
to the poor was conceived by the Bangladesh economist
prof, Muhammad Yunus. After protracted correspondence with the Government
and the Central Bank of Bangladesh the German bank, as an independent
bank was born in 1983. In Bangladesh the Associations fro Social Advancement (ASA) had development a micro-level
insurance plan in 1988, with the twin objectives of insuring the loans of its members and benefiting their families in the event of death of the
member. The life insurance policy that covers only death is a self administered scheme by the ASA. As this has proved to be highly profitable , the ASA has not tied up with any other commercial insurer. BRCA, an acronym
derived from Bangladesh Rural Advancement
Committee groups its members into a various voluntary groups. These
members deposit their savings regularly with the organizations . The members are
eligible for loans . BRAC has been offering
life insurance cover to its
member since 1990, under a micro- insurance scheme with no premium. However the
renewal of membership at a nominal annual fee is a compulsory to have the continued benefit of
insurance. The insurance
covers only death. By the end of the decade of the 1990’s and the
beginning of the present century the
phenomenon of micro-financing received global appreciation. Former US President Bill Clinton pledged to introduce the programme in the first destination towns of the migrants , viz, the inner towns
of the US, many presidential campaigns.
In a 1997 global conference on micro-financing
, Us First Lady Hillary Rodham Clinton
described the concept of
micro-credit as a macro-idea . The Bangladesh
experiment came to the notice of
the United Nations Commissioner for Refugees, and under the aegis of the UN,
many developments were initiated to spread the ‘Grameen , movement .
Alternativa Solidaria of Southern mexico is another successful example in
micro-financing , I India the efforts of SEWA (Self Employed Women’s
Association) in micro credit is gaining
the attention of many. Credit plus is a
policy designed by Aviva Life insurance
company to meet the requirements to Micro Finance institutions that offer financial support and financial
security by way of loans to the rural and social sectors Credit plus an
annually renewable group term insurance
plan that provides death covers to the group.
