Micro/inclusive insurance: New scheme likely to be embedded into other services
- The proposed insurance scheme is likely to be embedded with other financial services, like credit, savings, and remittances, to increase financial inclusion
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) is working on a unique plan to launch a micro-insurance scheme by the insurance companies which would link closely to existing governmental protection systems like Benazir Income Support Program (BISP) and Sehat Sahulat Program.
A report of SECP proposed that micro/ inclusive insurance scheme may be embedded with other financial services, like credit, savings and remittances, to increase financial inclusion.
The SECP has proposed that the insurance companies in collaboration with government as their partner in social protection schemes i.e. through partner-agent model can offer tailor made low cost, affordable and reliable insurance schemes to be launched on a mass scale. Such schemes can be in the areas of health insurance, crop insurance & Livestock insurance and mass scale disaster insurance.
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Currently, Pakistan is facing significant disaster risks such as heavy rainfall and floods. These risks adversely affect populations associated with agriculture, labour, and shopkeepers. This presents a substantial opportunity for insurers to target this segment. Micro-insurance has immense potential in reaching low-income and vulnerable communities.
The SECP proposed that the disaster micro-insurance scheme can facilitate post disaster recovery, enabling swift reconstruction and reducing the social and economic impact of disasters. In this context, micro-insurance, tailored to the needs of low-income and vulnerable populations, becomes a crucial tool in ensuring equitable access to protection and promoting inclusivity in sustainable development efforts. As societies deal with difficult problems, insurance becomes a key building block for creating a safer, more sustainable, and stronger future.
According, to ILO-Social Protection platform only 9.2% of the population in Pakistan is covered by once social protection program and 8.4% of the population is affiliated to social health protection scheme which leaves a tremendous opportunity for the insurance sector to tap in. With majority of the population working in informal sector the micro-insurance approach can thus be recommended as the second-best solution primarily where the Government does not have the capacities to give informal-sector employees access to social protection, SECP added.
Copyright Business Recorder, 2024
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