I have tried to find out risk faced by poor people in Nepal. After that, I have tried to further explain on how is the situation of microinsurance in Nepal & how it can help poor to decrease their vulnerability.

1. Risk Faced by Poor People in Nepal &
Relevance of Microinsurance to
Minimize Effect of Risk
- Omkar Pandey
Risk & Opportunity: Managing Risk for
Development

2. Outline
• Demographic information of Nepal
• Major Types of Risk Faced by Poor in Nepal
• Tools used by poor to face tackle
• What’s state doing?
• Microinsurance: Tool to confront risk by poor
• Obstacles of Microinsurance
• Role of Government
• Role of Insurance Company/MFI
• Conclusion

3. Demographic Information of Nepal
• Located in South Asia
• Area : 147,181 Sq. Km
• Population : 27.80 Million
• Population below poverty lines: 25.16%
• Major Cities : Kathmandu (Capital), Pokhara,
Birgunj, Biratnagar

4. Map of Nepal
Source of Map : www.lonelyplanet.com

5. Major Risk Faced by Poor in Nepal
• Death of family members
• Health
• Death of livestock
• Natural Disasters (Flood,
Landslide, Earthquake)
• Drought
• Infertility

6. Tools used to tackle risk
• Credit from local landlords
• Use savings
• Use loan from local
MFIs/Cooperatives/Self-
Help Group
• Help from community

7. What state’s doing?
• State provides old-age fund to
people above 60 but which is
far less to cover their regular
expenses
• Since most of the labor forces
work in informal sectors, they
are not entitled to get pension
& other benefits
• Benefit provided by state
doesn’t cover poor which
demands some mechanism to
manage risk of poor
Old People agitating for
reliable social security
Photo: ekantipur.com

8. Microinsurance: A tool to confront risk
for poor
• Craig Churchil defines Microinsurance as “the
protection of low income people against specific perils
in exchange for regular monetary payments
proportionate to the likelihood and cost of risk
involved.”*
• Microinsurance can help poor to cope with risks they
face in regular basis
• In Nepal, different MFIs provide informal in-house
insurance to their clients.
• Microinsurance is yet to be formalized as Insurance
Regulator are yet to bring solid policy to facilitate
* Churchil, Craig : Protecting the poor, A Microinsurance Compendium

9. Obstacles of Microinsurance
• Inadequate understanding about insurance
• Lack of sound legal framework
• Lack of liquidity with poor people
• Lack of service provider
• Lack of trust
Source: Interview with poor, literature

10. Role of Government/Regulator
• Provide sound financial
infrastructure with special focus
on regulatory framework
• Promote financial education
(with emphasis on
microinsurance)
• Continue existing support to
poor farmers (75% premium is
subsidized in crop insurance)*
*Source: Budget Speech of FY 2014/15 by Finance Minster

11. Role of Insurance Company/MFI
• Design tailor made product
to poor
• Establish efficient
distribution channel
• Promote Insurance
education
• Reduce administrative
hassles to receive
service/benefit

12. Conclusion
• In addition to teach for preparation of risk and
knowledge of risk, poor should be provided
access to insurance
• Access to microinsurance increase resilience
to poor
• Govt. should facilitate in preparing sound
financial infrastructure