Insurance, Credit and Safety Nets for the Poor in a World of Risk

The case for an increase in the role of insurance provision in the fight against poverty and vulnerability is well-established. This paper asks how it can be more effectively delivered to the poor, and what its role should be relative to other microfinance programmes, safety nets and informal insurance systems. It focuses on the various interactions, including how insurance may crowd out credit and informal insurance, and implications for the design of insurance schemes. It argue that well-designed insurance schemes, building on existing informal systems, and focusing on catastrophic and serious covariate risks, could offer protection against risk and contribute to poverty reduction beyond the combined impact of microcredit programmes, safety nets and existing informal mutual support systems.