To help deepen the penetration of microinsurance, governments think of providing transfer payments to the poorest citizens unable to pay for insurance. But subsidising health insurance schemes in places with restricted supply may lead healthcare providers to be less inclined to provide services to non-members, who are perceived as more likely to default on payment, informs one of the essays in ‘Protecting the Poor: A microinsurance compendium,’ edited by Craig Churchill (www.academicfoundation.com).
Apart from transfer payments which can take many forms, public intervention can be in the form of reinsurance, too, the essay notes. “As microinsurance is often used by a targeted population living in close proximity, the risk pool is not well diversified by location or occupation. Social reinsurance techniques could be used to improve the viability of small risk pools…”
Suggested addition to the insurance professionals’ shelf.
