Micro- Insurance in India: Present Challenges and Future Prospects

It is heartening to note that despite making significant improvements in all the areas relating to financial viability, profitability and competitiveness, there are concerns that formal financial institutions have not been able to include vast segment of the population, especially the underprivileged sections of the society, into the fold of basic banking services. Efforts of financial inclusion have largely remained concentrated around banking inclusion but the focus is fast shifting towards inclusion of poor people in insurance also. At this juncture the introduction of micro insurance by micro financial institutions and various public and private insurance companies comes from the recognition that this can serve the interests of marginalised sections and become the effective approach of ‗financial inclusion‘ in India. However, still micro insurance in India faces many constraints and need urgent and suitable policy attention. Keeping the above facts in view this paper has the following objectives; To understand the need and status of micro insurance in India; To discuss the constraints faced by the Indian micro insurance sector; To suggest suitable policy alternatives to the problems of micro insurance. This paper is based on the secondary information and it was gathered from various publications of government departments, reputed journals, books and newspapers.