Abstract:
Microinsurance in Pakistan is still in its early stages. More than half of current
microinsurance policies in Pakistan are being offered through the Benazir Income
Support Program, with the remainder being offered in conjunction with microcredit
services offered by microfinance institutions (MFIs), banks (MFBs), NGOs, and the rural
support programs (RSPs). BISP’s life insurance policies for breadwinners currently cover
4.1 million households. The policies offered through the microcredit sector are mainly
credit-life policies, which cover loan balances in the event of the borrower’s death. In
addition, small health insurance policies covering hospitalization is also offered by some
lenders, principally the rural support programs, to the borrower and (sometimes) their
spouse. As health costs and deaths in the family rank among the most important
economic stressors that households face, it makes sense that microinsurance should first
make inroads in these areas. There are currently small pilots in agricultural
microinsurance, but it will be some time before these products will mature.
It is difficult to say what the impact of microinsurance has been in Pakistan, since
rigorous evaluations have not been conducted to date. What we do know is that
utilization has been low, but gradually increasing as households become more aware of
the coverage that they have. In the short to medium term, microinsurance outreach
could be extended through offering health insurance coverage to the entire household of
microcredit borrowers, and by offering microinsurance to all members of the rural
support programs, rather than only its borrowers and spouses. Partnering with mobile
phone operators for payments could reduce the transaction costs. Provinces could use
the existing database of households and poverty scorecards executed by BISP to target
subsidized microinsurance policies to poor households above the BISP threshold.
The value to customers of existing microinsurance policies such as credit-life could be
enhanced by extending coverage to other members of the family (such as spouse) and by
offering the option for higher levels of coverage in the case of death.
