The Social Economic Paradigm of Microinsurance

The social protection of low-income people is a core function of any modern country. Often, its effectiveness is questioned especially for those with a poorly developed economy. In such countries poor people are heavily vulnerable to the potential risks of the environment, which does not enable them to participate actively and on an equal footing in economic relations. This is the reason why the issue of transferring a part of the social functions to private insurers is becoming more and more frequent. Governments' inability to cope with poverty creates market niches for the entry of new products such as microinsurance for low-income people. And this should not be considered as a "trademark" only for countries of the Third World but also as a problem for all of those who want to develop their insurance market sustainably. Of course, the integration of microinsurance into a country's social system implies a reconsideration of the business model by insurers, which allows the supply of specific products, qualified service, technology distribution channels, partnership with the state and the non-government sector, perception of mutual insurance practice, etc. Microinsurance can not only help poor people in their daily lives but also have the potential to improve public health and social services. In this sense, they are much more than an instrument for managing individual risks, but have the importance of an economic stimulus.