AP examines micro-insurance in Africa

The Associated Press examines the growth of micro-insurance in Africa, "a product accessible to those earning less than $2 a day, who pay tiny weekly premiums of sometimes less than a cent."

"The policies usually cover all conditions - including pre-existing illnesses like HIV/AIDS and maternity costs - and are written in language that is easy to understand," the news service writes. "Activists say it can help pay for health care for some of the billions of people in the developing world who cannot afford it."

According to an International Labor Organization study, about 14 million Africans use micro-insurance and there has been an 80 percent increase in the number of African policy holders over the last five years. "The numbers are still a fraction of the potential market but are growing rapidly as more organizations offer insurance products to the poor," the AP reports.

But micro-insurance can be a "hard sell," the AP writes. "It's difficult to persuade those struggling to survive to part with precious cash to pay for care that they may never need. For that reason, said World Health Organization expert Varatharajan Durairaj, micro-insurance could help the middle classes and some of the poor, but not the most desperate," according to the news service. Policies need to be large enough to pool risk successfully and plans that cover only high-risk communities could fail, Durairaj said.

The U.S. government increased spending on micro-insurance from $193 million in FY2007 to $265 million in FY2010, according to Melanne Verveer, the head of women's issues in the U.S. State Department. "We're looking at ways to build on the existing U.S. commitment to micro-finance, expanding it to include things like savings and insurance," Verveer said. "It's a highly effective tool to alleviate poverty" (Houreld, 4/12).