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: The big factor contributing to emerging opportunities for micro-insurance in India includes robust economic growth, which is increasing the income among rural households, says the recent UNDP report.

The present outreach of micro-insurance is around 5 million people, covering only 2% of the poor in the country. The insurance market is huge and still remains untapped. The potential for growth is tremendous as Irda and Indian insurance companies are striving hard to improve the penetration in this sector. Conservative estimates place the potential market size for micro-insurance in India, both life and non-life, at $1.4 billion to $1.9 billion. This figure is expected to grow, as micro-insurance is better understood and the demand increases. It is worth noting that the number of rural households is on the rise, the Labour Bureau’s report-Rural Labour Enquiry on Employment and Unemployment of Rural Labour Households-1999-2000 reveals.

According to the report, the number of rural households has almost doubled to 137.1 million in 1999-2000 from 70.4 million during 1963-65.

The opening up of the Indian insurance sector in 1999 has given micro-finance institutions (MFIs) a new window of opportunity.

Around 70% of India’s population lives in villages. Of these, less than 2% are insured. Tie ups between insurance companies and MFIs have resulted in a win-win partnership for all the concerned stakeholders.

There are micro-insurance requirements amongst the urban poor as well, who suffer from similar risks of health and accidents. Though the rural health insurance market is huge, it has so far remained untapped.

Poor sections of the population face a variety of risks. The primary risks being faced by the rural population, of crop failure, health, personal accident or loss of cattle, can be mitigated by insurance

Risk mitigation becomes important as their meager incomes and livelihoods are dependent on their physical wellbeing and health. As with the case of micro-credit, the opportunity for marketing insurance products to the poor (rural and urban) is huge.

Insurance companies are trying to penetrate these rural and urban markets through entities, which are already working amongst these communities, like MFIs, NGOs and self help groups (SHGs) for spreading the message of insurance as well as for servicing.

ICICI Lombard, the largest general insurance company, has tied-up with Self-Employed Women’s Association (SEWA) in Gujarat, BASIX (pan India), SKS Microfinance, SKDRDP (rural Karnataka), and other such institutions, to implement micro-insurance initiatives at the grassroot level.