Potential Microinsurance Help 77 Million People

Indonesia, Micro-insurance has the potential to help a third of Indonesia's population, or about 77 million people who have no insurance or savings. Given the large potential market share, private insurance companies are now seeing interest to develop products for the poor.

Stefan Koeberle, World Bank Country Director for Indonesia, said the incident unexpected events in life such as falling sick, accident, job loss, crop failure, or death for anyone having a big impact, but the impact of these events was far worse for the home low-income households. "It's important it was for poor families to be able to support themselves and mitigate those risks, without any additional financial burden," said Stefan.

Micro-insurance is one of the key components of the national strategy for financial inclusion in Indonesia, by providing insurance products to low-cost broad market segments and has not served until today. In addition, micro insurance is able to bring Indonesia closer to achieving financial inclusion.

To that end, the World Bank with Insurance Council of Indonesia and the International Finance Corporation to host the Micro Insurance Exchange (Microinsurance Markerplace) the first in Indonesia. With the implementation of these exchanges, Stefan hopes to stimulate innovative ideas for microinsurance.

"Stock microinsurance is an opportunity for stakeholders in Indonesia to learn from international experience in providing protection for the poor from the financial side. Important as that micro insurance solutions to Indonesia emerge from this country, therefore these exchanges also provide space for industry players at the grassroots level to demonstrate their innovations, "he explained.

According to him, there are several factors that until now still hamper the development of microinsurance in Indonesia. From the demand side, still very little awareness of the importance of insurance, lack of insurance products are intended to respond to the needs of the poor, the perception that insurance is only for the rich, and lack of trust those who provide insurance. From the service provider, an insurance contract (policy) is very complicated to dimengeti, billing claims are very time consuming and bureaucratic, as well as high transaction costs make insurance products available today are too expensive for the poor.

Simanjuntak Cornelius, Chairman of the Insurance Council of Indonesia urged the Indonesian government and the insurance industry needs to play better in the community educating the poor about the benefits of insurance. Because it is in line with national strategies for making financial services more affordable and accessible. It is becoming increasingly important because Indonesia is a country highly vulnerable to natural disasters such as earthquakes, tsunamis and volcanic eruptions. "Microinsurance for groups of low-income families have the potential to stimulate the industry in creating innovative products and competitive. It also could provide an alternative for the government to pay direct cash assistance to the poor by more efficient, "he said.