Part IV. Micro-insurance: a component of social protection

Instructional material | 01 January 2006
The definition of social security as a human right implies that (1) States have some kind of obligation regarding the right to social security / social protection and (2) everybody is entitled to a minimum of social protection, without exception or discrimination.But in many developing countries where States are characterized by low financial and institutional capacity, social protection coverage is dramatically low. In such contexts micro-insurance schemes may raise supplementary resources (financial means, human resources, etc.) that benefit to the social protection sector as a whole and contribute to facilitate and improve the governance of the social protection sector. More specifically, health micro-insurance schemes contribute to improve access to health care and have several positive effects in terms of participation of civil society, empowerment of socio-occupational groups including women. Moreover, micro-insurance as a mechanism of extension has several added values or comparative advantages as compared to classical social security schemes, including its capacity to reach excluded groups, lower transaction costs, benefits packages well-adapted to the target population's needs, and lower incidences of fraud and abuses. However, micro-insurance faces several limitations including poor sustainability, little or no redistribution, and poorly adapted legislative frameworks.