‘Like microfinance, microinsurance brings financial services to the grassroot level—something which the poorer sections of society in the developing world, particularly those living and working in the informal sector, away from urban centres, have never had access'

Schools all around the world successfully teach the three Rs, preparing pupils with the essential and basic intellectual wherewithal for setting off in life with an qualification or skill they can put to use to earn a livelihood in employment, business or trades.
However, one skill that is neglected to be taught in schools as part of the formal education regimen almost universally is financial literacy.
This has been the subject of many successful book publishing ventures, most notably books of the ‘Rich Dad, Poor Dad’ series that squarely puts the blame on the traditional education system that always seems to have steered clear of teaching the basic financial skills needed to build wealth, preserve it and plan for hard times.
In the developing world where the financial vicissitudes of life seem ever more real and pronounced, financial skills and recourse to measures that help tide over tough financial times are even more lacking.
It has been well recognised now that financial responsibilities are one of the more common causes of stress.
Planning for unexpected events that may result in financial difficulties is well worth considering in any milieu and environment.
Investing in insurance cannot guarantee a life free of accidents or misfortunes but it can help policyholders cope with the financial consequences of unpredictable events, giving them and their families peace of mind that help will be at hand should the worst happen.
In the event of any misfortune wrought by unpredictable events ranging from cyclones to accidents, well-planned insurance can protect individuals and families from financial difficulties.
However, in most cases especially in the developing world, insurance tends to be seen as a luxury and an indulgence to be dallied with only with spare money.
Purchasing insurance is often put off  or the decision is clouded by wishful thinking of the irrational “it only happens to other people” variety.
Often the insurance that is purchased does not provide adequate cover because of trying to save up on premiums.
These are erroneous beliefs primarily based on the lack of financial education and not having the financial prudence to set aside funds, however small, for managing risk.
Insurance tends to be seen as an avoidable cost and often has strong emotional strings attached to it. Decision-making on insurance is therefore often clouded.
The Pacific Islands region happens to be one of the developing regions in the world where both insurance cover and awareness of insurance products and what they can do in times of financial distress is low, exposing citizens to risk at levels higher than in other comparable states.
Any effort to address this problem and attempt to correct the situation, therefore, is to be welcomed. Last month, a new initiative directed at achieving these objectives was launched in Fiji, which happens to be the country where insurance uptake is the highest compared to other Pacific Islands states, but is still low by international standards.
The initiative, called the Pacific Financial Inclusion Programme, PIFP for short, was launched in Suva on July 15. Stakeholders were brought together at an event at the Reserve Bank of Fiji to discuss the extension of insurance to low income households in Fiji and to exchange ideas and learn more about its potential for both low income households and insurance companies.
The initiative is laudable because it promotes the concept of microinsurance. It is an interesting concept and one that people with comparatively lower incomes in the developing world can relate to because the other financial concept that uses the term “micro”—microfinance—has taken root quite well almost everywhere at least in the Pacific Islands region.
Microfinance has been a worldwide success story that has been pioneered by the Grameen Bank concept in South Asia, which has been replicated in almost every country including among the developed nations such as the United States.
The concept of microinsurance is intuitively similar and people are likely to have little trouble understanding and accepting the concept.
Microinsurance already protects millions of very low-income households against unpredictable events such as the death of a breadwinning family member, sickness and even crop failure around the world.
PFIP, an initiative of such global organisations as the United Nations Capital Development Fund (UNCDF), the European Union, AusAID and the United Nations Development Programme (UNDP), plans to proliferate the idea throughout the Pacific Islands region. The programme operates from the UNDP Pacific Centre based in Suva, Fiji.
Prior to launching the concept last month, PFIP completed a research concluding that there exists an opportunity for insurance providers in Fiji—and by extension the rest of the islands nations—to extend their services to low income and rural families. 
About 85,000 people are believed to have insurance policies in Fiji, leaving a major chunk of the population unprotected from unpredictable events, causing financial hardship.
According to studies, the potential for the insurance companies could amount to yearly claims valued between F$11.6 and F$58 million, which indeed is a huge opportunity for any insurance operator in the Pacific.
With increasing remittance flows and lower costs of money transfers, as well as the increasing ease with which money flows into the islands from the outside electronically, microinsurance products could be made attractive for premia to be paid automatically from remittance flows under a direct debit system that insurance providers could set up in collaboration with banks.
Like microfinance, microinsurance brings financial services to the grassroot level—something which the poorer sections of society in the developing world, particularly those living and working in the informal sector away from urban centres, have never had access to.
But with the proliferation of information and communication technologies and new ways of transferring funds digitally including with the use of mobiles, only a lack of imagination can limit the proliferation of financial services down to the last remote village, no matter where in the world.