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July 22, 2007 (LBO) – Sri Lanka should focus on giving insurance to the poor, regional experts in micro insurance say, with rural populations a largely untapped market. At present, insurance penetration in most South Asian countries is less than 10 percent, leaving over 90 percent of the market untapped.

Two micro insurance specialists from Asia say that there is money in the rural sector and it is time to focus on this missing market.

Most insurance products have to be sold. Except for health and motor insurance, they are rarely bought or demanded.

Analysts say there is widespread confusion about the investment motive and security motive of insurance.

“Insurance can be thought of as an inverse lottery,” Anuradha Rajivan, from the UNDP’s Asia & Pacific Regional Centre said. “Betting is popular in India – a low probability for a very high loss. This was understood very well.”

General insurance simply covers against a probability of loss for an upfront premium. Life insurance covers for death risk like general insurance and has an extra premium for a savings component. This is given back at the maturity of the policy.