Micro insurance: a positive intervention to household income and poverty reduction? Experience from Marangu Tanzania

Abstract

This paper builds on logical and systematic understanding of the micro insurance as a coping strategy towards improved household income and poverty reduction in Marangu Tanzania. The study determines the impact of micro insurance on the welfare of poor families in rural settings. Specifically, the study aimed at examining risks that low-income households face and strategic measures to mitigate them, it also assesses demands for micro insurance among low-income households and propose appropriate micro insurance products and mechanisms to relieve household poverty. An in-depth analysis used both secondary and primary data gathered through focus group, interviews, observation and documentary review. Data were analyzed and summarized using descriptive statistics aided by SPSS and MS-Excel. Hypothesis was tested by person correlation coefficient and it was discovered that micro-insurance contributes positively to the lives of people in a way of handling their medical expenses though health insurance, accessing balanced diet, build modern houses, pay school fees and able to save. Micro-insurance was also found to be a powerful tool in protecting the poor and their assets from negative external shocks, compensating the effects of covariate shocks (e.g., natural disasters), they address gender specific vulnerabilities, and freeing up household capital for investment in small enterprises. Micro insurance offers the potential for significant innovation in public-private partnership arrangements, cooperation across voluntary and private sectors, rural and urban services sector development, and the extension of social protection to underserved populations, for years to come. The study wraps up by concluding that Micro-insurance are a powerful addition to the social risk management product toolbox, and one that is flexible enough to be successfully implemented under a variety of institutional forms or frameworks. Nonetheless, careful attention and expertise are vital in designing micro insurance products and programs as they are considerably more complex than savings and credit programs offered by different organizations.