ABSTRACT
Microfinance services for low-income groups and communities have been expanding in the last two decades, with active participation by NGOs, development finance institutions and down-scaled commercial banks. Although the focus has been on providing microcredit and savings to a large number of small clients with deeper outreach, the challenge of reaching the poorest remains unmet due to high risks and costs. In the 1990s, various attempts on diversification and innovations of financial services shifted towards developing microinsurance products to reduce the vulnerability of the poor to income and expenditure shocks. Most microfinance institutions (MFIs) have focused attention on integrating microinsurance as a risk protection devise for themselves and their clients. From the beginning of this century, MFIs have moved beyond ‘minimalist lending’ to the poor to microfinance quality enhancement and risk diversification through the development of microinsurance schemes to protect clients against the risks that can lead them further into poverty.
