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Zurich, Switzerland (GenevaLunch) – Sales of micro-insurance policies to the world’s poor has increased 50 percent since 2008, according to Zurich Financial’s micro-insurance unit. Small policies that cover health events, household contents, life insurance, and fire and flood protection for low-income people are increasing because of innovative ways of distributing insurance products, which the company says are themselves innovative.

Distribution channels include pharmacies in Bolivia that sell scratch cards for personal accident insurance, and post offices in India that offer life insurance. Low-income households in Indonesia can buy flood coverage for about $10 per year through cooperatives.

Zurich has partnered with institutions that include Women’s World Banking, a New York microfinance group, active in 30 countries, which serves 11 million low-income entrepreneurs. They have been working together since January 2009 to deliver insurance products to a “bottom-of-the-pyramid” population.

Some four billion people are estimated to live on less than $2 per day. This is potentially a huge insurance market, according to analysts.

Microinsurance is an outgrowth of the global popularity of microcredit schemes, by which small amounts of money are lent to small entrepreneurs, most often women, for short periods of time.It is increasingly profitable and at the same time a pillar of many official aid projects in developing countries.

The philosophy behind microfinance, which includes insurance, is to make finance accessible to more people, even those who would not normally qualify for financial products, either because they have no collateral or no credit history, or simply because the sums involved are too small to be profitable to traditional financial insititutions.

Link to other site: Bloomberg