Insuring the Uninsurable for Poverty Alleviation in Nigeria: What Micro-Insurance can do?

Abstract

The populace in developing countries be it better or worse offs are exposed to a variety of risks like illness, disability, death, unemployment, or crime vulnerable to become poor. Low income households, however, are less able to prevent and mitigate risks and so they are less able to cope with the consequences. The developmental role of conventional insurance service any nation is pivotal. This is because economic development focuses attention upon the development and use of recourses to increase supply and improve the distribution of economic goods. However, in Nigeria where there is low insurance patronage and instead the vast majority of the citizen are exposed variants types of risk. The resulting effects are poverty, economic insecurity, insurgency, and social vices. Micro-insurance is considered as one of the most effective means of reducing the vulnerability of the poor from the impacts of disease, theft, violence, disability, fire and other hazards. This method of insurance can protects against unexpected losses by pooling the resources of the many to compensate for the losses of the few, the more uncertain the event the more insurance becomes the most economical form of protection. Micro-insurance moreover, can break the cycle of poverty experience in Nigeria by providing low-income households, business and farmers with access to post disaster liquidity, thus protect their livelihoods and providing for reconstruction. Therefore, insured households and firms are more credit worthy; these kinds of insurance can also promote investments in productive assets and higher risk yield crops. As a result, this study recommends the establishment of micro-insurance in Nigeria. While setting the micro-insurance caution should be exercise to make it in conformity with social, cultural and religious setting of the populace for it to gain recognition and acceptability otherwise it is likely to get low patronage. DOI: 10.5901/mjss.2013.v4n2p375