Abstract
Microinsurance offers policies to cover four types of risk; life, health, accidental and property and is a key element for the financial inclusion of the poor. This study examined the influence of insurance literacy and demographics on the likely hood of having a micro-insurance policy. The survey was conducted in the National Capital Region (NCR), India. Micro-insurance literacy was measured using a Quiz. The demographic variables included in the study were gender, age, education, marital status, income and the type of employment. Data analysis was performed using descriptive statistics and binary logistic regression analysis. Results show that insurance literacy score, income, employment and education increased the likely hood of owning an insurance policy. Furthermore, it was found that the average insurance literacy was only (36 .75 %). Microinsurance can provide risk coverage to the poor which are the most vulnerable section of the society but so far almost 90 percent of the Indian population is uninsured. This study is warranted by the need to create a model that identifies the sections of society which are unlikely to own microinsurance thus contributing to the low offtake of insurance. This study may be beneficial to the government in terms of regulations, the insurance providers in designing their products and Non-Governmental Organizations (NGOs) so that they can reach out to the unlikely groups.
Highlights
Insurance is a financial contract or plan between the insurer and the insured to compensate for any unforeseen financial loss due to risk
The results of the logistic regression show that the independent variables can predict between 20.7% and 28.5% of the variance in microinsurance demand
In this paper we examined the determinants of demand for microinsurance in the National Capital Region (NCR) of India
Summary
Insurance is a financial contract or plan between the insurer and the insured to compensate for any unforeseen financial loss due to risk. Each policyholder pays premium to an indemnity deposit which is used to pay for losses (if any) experienced by the insured. Microinsurance can be for health, life or property at a low premium ( "micro”) meant to provide coverage against risks. Potential global market size of microinsurance market is estimated to be around $40bn. For India the annual potential market size of microinsurance is around USD 1 billion. The breakup is as follows: Life Insurance - USD 0.24 to 0.32 bn per year; Health - 0.20 to 0.28 bn per year; Crop - 0.20 bn per year; and Livestock - 0.1 to 0 .12 bn per year. Around that 90% of the Indian population constituting of 950 million people are not covered by insurance and 88% of Indian labor force are still left out from any kind of insurance (UNDP, 2007)
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