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Informal microinsurance schemes - the case of funeral insurance in South Africa
01.03.2001
South Africa has an active informal insurance industry that profitably sells insurance to low-income consumers (microinsurance). This article is based on a case study of the informal funeral insurance industry in a rural township in South Africa. The study revealed that poor people often cover the very considerable funeral expenses from a number of sources, including informal credit, informal insurance, and friendly societies. The practices of informal township funeral insurers are contrasted with those of formal insurers. The products of informal insurers were much more popular among respondents than those of formal funeral insurers, because the products fitted the socio-economic contours of their clients' lives. A series of lessons can be drawn from the practices of informal insurers for the development of new microinsurance or the improvement of existing microinsurance products.