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Maame Serwa Inkoom is a farmer. For the 48-year-old mother of eight children, rearing grasscutter and selling produce from her three acre farm land is her main source of livelihood. She has no insurance against risk such as drought, flood, price swings, diseases, and the likes that people in her condition are prone to. The Awutu Baweiasi-based farmer has never heard of insurance. After all, insurance companies are concentrated in urban areas where they can easily clinch lucrative deals. The vast majority of Ghanaians work informally; these people pay no taxes, and enjoy no social protection whatsoever. They must look after themselves, because no one else will. Falling crop price can hit poor farmers as can bad weather and so do generic crop losses hit the poor hardest. Vulnerability and poverty go hand in hand but micro insurance holds out the promise of breaking a part of the cycle that ties them together. Insurance for especially the informal sector which forms a greater percentage of the Ghanaian economy has been a no ventured area in Ghana. And this has left the larger section of the population without any opportunity to save or pool a portion of their disposable income into an insurance reserve. The National Insurance Commission (NIC) is now urging insurance companies in the country to consider introducing micro insurance products and the Ghana Insurance Association say they are readying themselves to take up the mantel. A plan by the International Finance Corporation (IFC), a member of the World Bank Group, is also advocating insurance companies in Africa to extend micro-insurance beyond urban areas to make it easier for them to serve low-income households. The poor in Ghana are exposed to many risks, from the death of breadwinners to ill health, extreme weather, and the potential loss of property and lives through fire out breaks, motor accidents among many other natural disasters. Isaac Yaw Buabeng, Head of the research and External Relations at the NIC, in an interview said extending financial services such as insurance to people and places where they are most needed is a crucial part of NIC�s strategy realizing the benefits of low-premium coverage. �Our research has indicated that there is a strong link between reducing the vulnerability of the poor and insurance,� said Mr Buabeng, adding, �Even the rich could fall back into the poor bracket without insurance.� Insurers proposed the need for governments to consider regulations to strike a balance between increasing access to insurance to lower-income people, and protecting them against unscrupulous product providers. However, the issue of regulation is anchored on the definition of micro-insurance that seeks to ensure lower underwriting and market-conduct risks to make it affordable to the poor. Micro-insurance will address poverty but the bottom-line is putting in place, a regulatory framework to protect the poor Ghanaian, especially from potential fraudsters, and for a smooth take off in the country, there should be sufficient consumer education. A crucial asset in the fight against poverty could be micro insurance that covers the poor against disease, accidents and natural disasters. On the African continent micro insurance is a novelty as it has a paltry 0.2 percent of poor lives insured under micro insurance. Due to the presence of new insurance companies in the country, Ghana�s insurance industry at the end of 2008, hit the $1 billion mark but none of the 42 insurers doing general and life business writing motor, marine, accidents, fire and engineering insurances and offering policies like child education, family security, cash builder insurances and an additional funeral policy where claims are paid within 48 hours after the death of a person among others, provide low-premium protection for those most-affected by poverty. Mr Buabeng suggested that insurance companies should focus on developing more targeted products, alternative and more cost-effective distribution channels, and improved service delivery models to reach more people. This will mean that insurers will have to design pocket -end products as a strategic move to increase insurance penetration in Ghana. The low level of insurance penetration in Ghana creates an ideal opportunity for insurers to develop products and services to better meet the market�s needs. C. C. Bruce Junior, Executive Director of Enterprise Life Assurance Company Limited, said, �Micro insurance where insurance can be sold to the informal sector is very vital.� He pointed out that the African life Insurance Seminar to be hosted by Ghana would take a critical look at micro insurance. The two-day event slated for November is expected to bring together insurance gurus from 23 African countries operating in the life business to deliberate on relevant technical issues related to their area of operation. The NIC, he said, is on regular basis rolling out programmes to create awareness among the public on the need to undertake insurance polices. Though some individuals are rich enough to buy mainstream insurance, according to the United Nations, more than 40 percent of Ghana�s 23 million population lives below the poverty line of one dollar a day, which is not enough to afford traditional coverage. Micro insurance however can cost only a few Ghana cedis per year and could help those with a low income to overcome the financial shocks that come along with natural disasters, accidents, or disease. Insurance serves many practical purposes such as being a source of investment, pension fund and collateral. There are various types of insurance policies that the many insurers offer to the public. Another merit of insurance is that the policy holder is more protected as they can receive premiums depending on the insurance rate to offset the cost of whatever damage is done, minimize cost and protect themselves financially by undertaking business insurances to protect their businesses against risks. In as much as the insurance companies have a responsibility in marketing their services to the public, the National Insurance Commission (NIC) also has a role to play in educating the public about insurance. Mr Buabeng thinks there is some level of understanding of insurance and the NIC is embarking on public education to let the public understand insurance policies, adding that NIC will soon start a TV programme to give the public a general understanding of insurance. �I think that if we continue with this, public awareness will increase and people will get to know the value of buying insurance. �Some times people perceive insurance as being for the rich, but this is not true,� said Mr Buabeng. The main issue is for insurance companies to design products to help the poor deal with the risks that life throws at them. One micro insurance product insurers can consider is crop insurance, insurance for petty traders, insurance for artisans as well as operators in the other fields in the informal sector. Development experts are recognizing how intimately the lack of insurance and the persistence of poverty are related. The lack of insurance markets has not happened through inattention and hundreds of dissertation and other scholarly studies explain in careful detail why insurance markets can reduce risk greatly in the informal sector. Being insured also often means having a cushion of savings on which to fall back on. Having savings allows households to manage their affairs more flexible and it cushions against loses that are fundamentally uninsurable. Insurance companies need not be physically present in all areas to reach operators in the informal sector easily as they could have local agents who will be paid small commissions to collect funds and check claims. Policy makers can stop worrying about the vagaries of life and turn their attention fully to the risk facing individuals especially village dwellers that cannot deal with their own drought, floods, prices swings, diseases, epidemic and the likes. The aim is to create professionally run sustainable insurance programme that protect poor households from the most debilitating losses. Though insurers cite a need for more technical capacity, challenges with product development, difficulties with delivery channels, and regulatory hurdles as among the main challenges to expanding insurance coverage to the poor, solutions will have to be addressed. Some of these include having data on which to base premium, ability to cut the cost of dealing with many small transactions and reinsurance being bold to venture into micro insurance.