October 13th, 2010 at 10:27 pm, V.Rengarajan ()

Thank you Kate for your response.
One basic fact first to be appreciated in MF operation for poverty reduction, is that when the pro poor micro financial services ( micro savings, micro insurance, micro credit, transfer services and other supporting non financial services ) are clearly identified for the said task, our focus should be more on demand side perspectives to search how to innovate and deliver them holistically to the target group for achieving the declared goal. In the process, there may be hurdles but one should not throw out ‘ the responsibility ‘ in the bidding corner. My argument is that after so many years of trials , it came to light that the poor could be bankable. On similar account the poor should be made insurable . The question of affordability is debatable .However, the fact on willingness of the poor to pay for insurance and affordable product in Kenya’s market as pointed out in your posting , is encouraging.. Aggressive insurance literacy on the values of insurance and suitable insurance product and services. are necessary for breaking the ‘myth’ of the poor community, If an institution ( although called Micro financial institution) .is not able to provide this MF product , coordinated endeavour among the development partners may ensure the effective outreach after all the poverty reduction task is common to all at the field..
Regarding the paradox ‘premium vs. pay off’ again. I feel, it is a subjective one. And the value proposition depends on how it is approached. That is looking it from commercial point is different to the perception from demand side social perspectives. In case of cow’s mortality, the insurance may facilitate the survival and continuity of the income generating livelihood of the concerned poor there by giving a confidence to the poor for a rejuvenated livelihood instead of falling in debt trap.(in the case of inability to repay the cow loan ) . Here the likelihood of gaining confidence for revival of livelihood and hope for effective management of risk at the time of crisis are the two factors , to me , which are very highly valued ones from the poverty reduction point of view. Further in the field, even one case of a beneficiary with such ‘a pay off’ will have a demonstration effect and multiplier implication as well particularly in poor community. This is good for the ultimate task
In this regard I wish to share my experience as an advisor to an NGO. For effective out reach of insurance product to the target poor, selected SHG leaders have been trained through seminor /workshop to function as insurance agents with the tie up with the leading insurance companies. With the local feel and culture these women leaders of the group easily convinced their members and subsequently many of them are covered under insurance schemes. Later they gained confidence in coping with the risk as they revealed in subsequent evaluation.
In fine the outreach of the product to the target group convincingly with their social acceptance is vital for the said task .The means of reach .and likely pay off appear to me immaterial . Further in the context of availability of free premium insurance for life from government in India as I referred to in my posting for the poor may very well go together credit insurance products . Coordinated effort is needed for this and it may not be difficult task , I feel, since the MFI turned NGOs who have expertise in social mobilization can do the said task since after all their own poor borrower clients are also benefitted . So to say in a way the provision of social protection by insurance to the asset created out of micro credit of the MFI benefit both the supplier and the borrower as well since the productivity of the credit is protected from the risk/vulnerability there by ensuring income generation at client level and recovery at MFI level are not getting choked. . Here what is required mind set for social venture in the battle against poverty- Thanks