4.1 Definition

Microinsurance or inclusive insurance can be defined as the provision of insurance coverage to low-income individuals in developing countries. What is known as “microinsurance” today originates in the practice of microfinance organizations offering credit-life insurance, which covers the outstanding debt in the event of a borrower’s death, to their clients. However, microinsurance has taken on a life of its own and for some time it has existed outside the shadows of its better-known cousin, microfinance.

Microinsurance is another example of a concept where we stumble on a roadblock if we are looking for a generally agreed upon definition. Perhaps the most widely cited definition is coined by Craig Churchill^[1] who defines microinsurance as “the protection of low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved.” To complicate matters further, the distinction between traditional, conventional, or mainstream insurance and microinsurance is somewhat blurred. Crucially, the distinction hinges on the market segment served by the insurer with microinsurance targeted at low-income clients who cannot access conventional insurance.