While inaugurating the Sixth Global Conference of Actuaries organized by the Actuarial Society of India the International Actuarial Association and the Federations of India Chamber of Commerce and industries (FICCI) at New Delhi in February 2004, C S Rao, Chairman of the IRDA, mooted the idea of reaching the rural areas and the marginal segments through the channel of Micro insurance . Micro insurance is a comparatively new concept in the Indian market. Micro financing refers to finances that are made available to the poor and other marginalised sections of the community to whom no financial support or insurance security is available , either from banks or from insurance companies .
Micro financing comprises micro-savings, micro-credit, and insurance of property and lives as a bundle of values. The concept of micro financing as an idea to alleviate poverty was experimented on a larger scale in our neighbouring country , Bangladesh. way back in 1974, during a great famine in the country the idea of forming a bank a for exclusive micro-credit to the poor was conceived by the Bangladesh economist prof, Muhammad Yunus.
After protracted correspondence with the Government and the Central Bank of Bangladesh the German bank, as an independent bank was born in 1983. In Bangladesh the Associations fro Social Advancement (ASA) had development a micro-level insurance plan in 1988, with the twin objectives of insuring the loans of its members and benefiting their families in the event of death of the member. The life insurance policy that covers only death is a self administered scheme by the ASA. As this has proved to be highly profitable , the ASA has not tied up with any other commercial insurer. BRCA, an acronym derived from Bangladesh Rural Advancement Committee groups its members into a various voluntary groups.
These members deposit their savings regularly with the organizations . The members are eligible for loans . BRAC has been offering life insurance cover to its member since 1990, under a micro- insurance scheme with no premium. However the renewal of membership at a nominal annual fee is a compulsory to have the continued benefit of insurance. The insurance covers only death. By the end of the decade of the 1990’s and the beginning of the present century the phenomenon of micro-financing received global appreciation. Former US President Bill Clinton pledged to introduce the programme in the first destination towns of the migrants , viz, the inner towns of the US, many presidential campaigns. In a 1997 global conference on micro-financing , Us First Lady Hillary Rodham Clinton described the concept of micro-credit as a macro-idea .
The Bangladesh experiment came to the notice of the United Nations Commissioner for Refugees, and under the aegis of the UN, many developments were initiated to spread the ‘Grameen , movement . Alternativa Solidaria of Southern mexico is another successful example in micro-financing , I India the efforts of SEWA (Self Employed Women’s Association) in micro credit is gaining the attention of many. Credit plus is a policy designed by Aviva Life insurance company to meet the requirements to Micro Finance institutions that offer financial support and financial security by way of loans to the rural and social sectors Credit plus an annually renewable group term insurance plan that provides death covers to the group.