Insurance has often been proposed as a remedy for risk, which in turn is a major cause of poverty (World Development Report 2000/2001). However, the history of insurance schemes (especially crop insurance schemes) in developing countries is unpromising with relation to both financial sustainability and poverty reduction. Is it possible to do better? As part of the diversification of microfinance, some new schemes aim to make progress by way of cost-covering premiums, poverty targeting and a range of defences against moral hazard of which the best known is restricting the insurance to climatic hazards in lieu of a yield or income guarantee. We examine three of these schemes (BASIX Andhra Pradesh, India; CERUDEB Uganda; and the proposed WIA in Ethiopia) and, with respect to CERUDEB, describe the process of premium setting, the results of sensitivity analyses and the determination of the optimal 'excess' or deductible. Serious impact analysis is premature, but the portents for filling a gap in the market and reducing poverty without running losses look promising.
During the period of economic crisis from 1999 to date, when the Bolivian microfinance industry was undergoing turmoil and facing public hostility, the microfinance networking organization FINRURAL carried out (in 2002) impact evaluations on eight of its partner microfinance organizations (MFOs). The evaluations went beyond measuring institutional performance to assessing the impact of the MFOs on their clients and even non-clients among their target group, using a range of over 30 performance indicators. This article briefly summarizes the impact on clients: better-off clients generally experienced positive impacts on income, investment and employment, but some impacts on the income and investment of poorer clients were negative. The cost-effectiveness of the impact evaluation programme of FINRURAL is then assessed. This effectiveness was seen as particularly valuable in terms of enabling organizations to broaden the range of services they offer and create publicity material. A further indication of the value placed on the service by the MFOs is that more of them are now willing to pay the unsubsidized charge for FINRURAL's services for the second round of assessments, due to take place later in 2004.