A Critique of Micro-Insurance Models for Microfinance Banks to Boost SMEs in Nigeria

Mfon Sampson Ukpong and Ikechukwu A Acha
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Mfon Sampson Ukpong: Department of Insurance, University of Uyo, Akwa Ibom State
Ikechukwu A Acha: Department of Banking/Finance, University of Uyo, Akwa Ibom State

Noble International Journal of Economics and Financial Research, 2019, vol. 4, issue 1, 01-09

Abstract: This study is a critique of the diverse models adopted for micro insurance covers by microfinance banks in Nigeria. It is aimed at ascertaining the most functional model(s) which best fits the financial system and its low income earning entrepreneurs and businesses. Micro insurance is a financial arrangement to protect low income people against specific perils in exchange for regular premium payments. It is mostly provided by microfinance banks as an innovation to their micro financing activities such as lending, leasing, savings and cash transfer to the poor or those excluded by the mainstream retail banking sector. Diverse micro insurance models have been developed over the years but these are characterized by one flaw or the other such that little value is offered in contrast to the large sums involved. There is therefore a need for a model which could provide a comprehensive yet affordable micro insurance service. In this paper, six models adopted in various countries are analysed with a view to relating their effectiveness to the Nigerian environment. We conclude that the partner-agent model and mutual cooperatives fit the Nigerian financial system and recommend them to microfinance institutions in their efforts to boost SMEs in Nigeria.

Keywords: Micro Insurance; Microfinance; Model; Hazards; Risk; SMEs (search for similar items in EconPapers)
Date: 2019
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