Political: Political instability can result in the emergence of a new government, which adds additional risk in the form of new laws governing international microfinance institutions that can ultimately further impoverish the poor. Tradeoff of fraudulent claims. Insurance companies are forced to trade off fraudulent claims in order to provide affordable services, since security and admin costs are the largest contributors to insurance premiums. Economic: Microinsurance increases the chances of people showing up for work, becase they are covered by health insurance. By having insurance, these people can now seek medical attention, which will better their health, and prolong life expenctency, which increases income of family, and will not have to liquidate their assets in event of a death. This will allow them to retain their working assets so as to better their quality of living. Reduce risk by pooling the risk of many, reduce anti selection. Market development:
This is the end of the preview. Sign up
access the rest of the document.