Micro-Insurance: A Veritable Product Diversification Option for Micro-Finance Institutions in Nigeria

Abstract

Safe-guarding the poor and low-income people from the financial hardship arising from the occurrence of supposedly insurable risks informs this study. This challenges the widely believed concept of the ‘non-insurability’ of the poor, owing to their inability to pay huge premiums. This study therefore examines the concept of micro-insurance and its applicability in Nigeria. Micro-finance banks, which presently provide mainly micro-credit and savings products targeted at the low-income group, are considered an appropriate facility for the micro-insurance product. The Integrated Theoretical Review Design (ITRD) with focus on archival review and document analysis is adopted for the study. This review brings to the limelight the fact that micro-insurance is relatively new and only remotely practiced in Nigeria. One of the reasons for this is that Micro-finance Institutions are short of appropriate models on which to present their offer. To this end, this study proposes the Community based/mutual micro-insurance model for Nigeria as an effective way of reaching the rural and semi-urban population who mostly fall under the low-income group. Effective and efficient enlightenment programmes on micro-insurance for the low-income people is also encouraged.

Keywords: Micro-finance, Micro-insurance, Micro- entrepreneur