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Managing Risk in the West Bank: A Review of Supply and Demand for Microinsurance

Michael Ferguson, Roland Steinmann
Microfinance Opportunities, AED
United States Agency for International Development
June 26, 2009

The results of the investigation into the current demand and supply of microinsurance found most Palestinians, especially the economically active poor comprising the majority of our demand-side sample, view their lives as characterized by high risk. Though robust informal mechanisms exist to help cope with this risk, there is some indication that those informal mechanisms are becoming less effective. Most Palestinians seem willing to embrace formal insurance as an alternative strategy. With the exception of motor and government health insurance, few currently have insurance. This is because the market offers little to low-income Palestinians, and many in turn see the insurance market as serving only the rich. It is a scenario into which well-designed microinsurance could seemingly make a real impact.

A nuanced look from the supply side reveals that the market for commercial microinsurance is in fact rather restricted. Nevertheless, there are undeniably opportunities. One point of entry would be for MFIs and banks to offer credit-life-plus and property insurance—two products directly related to their core business—which could provide additional benefits to their customers. At the same time, trade unions and cooperatives could jointly explore the potential for group coverage specifically tailored to the needs of the respective client profile. Accident, health, and eventually life and property insurance are all areas of potential development, if the programs are designed and explained.

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Although most economically active, poor Palestinians view their lives as characterized by high risk, few currently have insurance. Many see the insurance market as serving only the rich.
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