ADB to provide $2m for micro-insurance

Posted: জানুয়ারি 28, 2009 in ADB

The Asian Development Bank (ADB) will provide a grant of $2 million to develop the micro-insurance sector in Bangladesh and help reduce the vulnerability of the poor from sudden losses in income.

Around 20,000 people in Bangladesh are expected to directly benefit from the grant provided from ADB’s Japan Fund for Poverty Reduction (JFPR), ADB said in a statement released from Manila yesterday.

The grant will finance development of low-cost insurance services to protect the livelihoods of the poor, especially women, from risks such as accidents, illness, theft, and natural disasters.

It will also fund an insurance awareness campaign and training to at least 50,000 rural poor households.

“Those risks that would mildly affect middle class households are a significant setback for the poor and often push them deeper into poverty,” said Mayumi Ozaki, finance specialist for rural and microfinance of the South Asia Department.

“Problems like illness, fire, or theft can severely set back efforts to ease poverty. Without insurance, the poor resort to borrowing from informal sources, withdrawing from their savings, or selling assets to cope with these shocks.”

Although microcredit is well-established in Bangladesh, micro-insurance, while gaining in popularity, is still a relatively new concept. It is estimated that 93 percent of the country’s total population has no access to insurance services.

“The project will promote micro-insurance through non-governmental organisations with a long-established presence among poor communities, high accountability and sustainability, and the presence of a regulatory body,” said ADB said.

At least 20 microfinance institutions will undertake capacity training on micro-insurance operations to develop expertise in insurance underwriting, screening, financial management, product development and marketing.

The Japan Fund for Poverty Reduction (JFPR) is an untied grant facility established by the Japanese government and ADB in May 2000.

From an initial contribution of $90 million, the fund now stands at well over $360 million, of which $224 million has been committed.

The daily star 29.01.2009

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