1Senior Research Fellow, Department of Business and Financial Studies, University of Kashmir, Srinagar, Jammu and Kashmir, 190020
2Department of Business and Financial Studies, University of Kashmir and Director, UGC Human Resource Development Center University of Kashmir, Srinagar, 190006
People under poverty are generally short of resources to satisfy basic needs and are therefore vulnerable to number of perils. Poverty is related to the vulnerability and thereby risk. People under poverty are found to have more income variance and therefore, more probability of falling under poverty. On the other hand, people with high risk exposure are expected to have more income variance, hence are more vulnerable to poverty. People under poverty rely on informal means to manage the risk which often do not serve the purpose in time of high risk exposures. Microinsurance focusing the low income segment of the population is a formal risk management mechanism. Over the past one decade, microinsurance has been developing at quite a remarkable pace, and has been providing relief to the people under poverty. At the end of 2012, data reveals that 174 million lives in India, 44.4 million in Africa and 44 million in Latin America has been brought under the umbrella of microinsurance. There is still a considerable portion of the population not having any formal risk mitigating mechanism, and hence are facing the catastrophic events under poverty. Therefore, microinsurance needs a further push to bring more and more poor under the coverage to restrict the adverse consequences of risk exposures.
Income variance, Microinsurance, Poverty, Risk management and Vulnerability
