Microinsurance is lucrative, so will it be the next 'revolution'?

Microinsurance works like microfinance: It enables the poor who live in developing nations to access life insurance, crop insurance, and insurance for damage caused by natural events.

Commercial insurance firms have realized that they've been overlooking a profitable market segment, but now that they are aware of what they've been missing out on, they are now capitalizing on the new opportunities. One organization is leading the pack, having raised some $44 million for the world's first microinsurance fund. Before you think that this is strictly a cash grab, consider the benefits for the poor, who have never been able to afford insurance before. Farmers will take chances with new seed stocks; or people who have been devastated by natural disasters such as hurricanes, floods or other catastrophes will no longer have to lose everything. And should people wish, they can purchase life insurance, which would help pay for the rising costs of funerary services. Calling this venture "a breakthrough for microfinance and alternative investment," the Leapfrog Financial Inclusion Fund will bring insurance products to an estimated 25 million low-income people in Africa and Asia. With an estimated market of a billion people, the microinsurance venture is seen as a win-win situation, with both the poor and the microinsurance providers profiting from the new relationships. The idea is not new. Credit for the idea has been given to the International Labour Organization, which began "experimenting with super cheap policies" in the 1990s. In 2004, European-based Interpolis started it's microinsurance enterprise in Sri Lanka and has since expanded to the Philippines. Last year, influential Forbes magazine ran an op-ed piece recognizing microinsurance as a way for the financial services sector to survive the global economic crisis, concluding

"Finally, and most important: Done right, microinsurance is a rapidly expanding and highly profitable business."