Lao companies to offer micro-insurance for poor
Lao companies to offer micro-insurance for poor
Lao financial institutions are expected to soon make micro-insurance schemes available to very poor people, which could better protect their social security.
Micro-insurance works the same way as regular insurance, where people make regular payments and in return receive compensation if they fall victim to specific misfortunes, except that it is targeted at those with very low incomes.
The Lao Micro Finance Association and Allianz General Laos (AGL) held a workshop in Vientiane yesterday to discuss the introduction of micro-insurance in Laos, in response to rising demand for the service.
About 50 representatives from local micro-finance institutions, development agencies and the Lao Postal Savings Institute attended the workshop to learn how to provide micro-insurance to Lao people – in particular workers with low incomes.
Financial Institutions Supervision Department Director General, Dr Akhom Praseuth, officially opened the one-day workshop. The event was financially supported by the Swiss Agency for Development and Cooperation, which wants to see the introduction of micro-insurance in Laos.
Micro-insurance plays an important role in helping poor people access social security protection and manage risks including death, accident and illness, according to a press release from the workshop organisers.
As in many developing countries, the majority of poor people in Laos do not have any kind of formal social security protection. These people are the most vulnerable to risks such as death, illness, accident and natural disaster.
According to the press release, research shows micro-insurance has a positive impact on the lives of the poor and their communities. But at the moment there are no micro-insurance products available in Laos.
A micro-insurance expert from the Germany-based Alliance Group spoke at the workshop, introducing the concept and discussing the potential introduction of micro-credit life insurance in Laos.
Micro-credit life insurance often comes in the form of small loans that are provided by micro-finance institutions to low-income customers. Micro-finance institutions act as distribution partners for micro-insurance.
Customers will typically also be covered by credit life insurance, which is an insurance scheme where borrowers who die have their outstanding loan debts paid off so their families are not left with a financial burden.
The micro-credit life insurance can also include benefits for the policyholder or their spouse to assist with funeral costs, so low-income families can afford a proper ceremony.
The Lao Micro Finance Association is a national network of micro-finance institutions in Laos. It has 52 members, 32 of which are micro-finance institutions representing roughly 50 percent of the formal micro-finance sector.
The association also provides professional services to its members in the areas of capacity building, knowledge management and advocacy.
vientiane times
