Research Of Introducing Micro-insurance Into Microfinance

Our country is a traditional Agricultural country, the agricultural population number is big. Agriculture plays an important role as a basic industry. So our government pays great attention to agriculture, rural areas and farmer’s problem. Agricultural industrialization is the development direction in the future. Agricultural industrialization generally requires higher on facilities and technology, but farmer’s income is limited, it is difficult for them to invest through the self accumulation, they in urgent need of financial support from outside. Because consideration of agricultural production, once it suffered the natural calamities and accidents, agricultural production will break off and result in farmers unable to repay the loan, bring losses to banks. Then it will influence the supply of credit. There always being imbalance between supply and demand in rural credit market in China. Government has introduced relevant policies to open and perfect promote the rural financial market and financial system.Microfinance is an effective means to provide credit services to deal with the problem of rural poverty and promoting agricultural and rural economic development international. It is targeted on the poor, loan amount is relatively small and do not need to guarantee and mortgage and time limit is short. Microfinance had been introduced into our country since1993. It had made considerable achievements and become the main force of rural financial market through four stages of development.Micro-insurance’s premium and coverage is relatively low. It was developed for specific countryside risk and had public welfare nature. Micro-insurance was beginning in the United States at first, and then booming in Asia, Africa, Latin-America’s countries. Micro-insurance has made certain achievements in our country. Farmers recognize the insurance guarantee and micro-insurance prospects is optimistic. According to financial symbiosis theory and risk correlation between microfinance and micro-insurance, combining microfinance and micro-insurance can effectively relieve the contradictions of imbalance of supply and demand in rural microfinance market, increase the supply of rural microfinance and support the development of agricultural industrialization.Synergies combining Microfinance with micro-insurance would be far greater than their respective development according to symbiosis theory. For farmers, they can gain microfinance services by buy micro-insurance, and can also get risk guarantee at the same time. For microfinance banks, they transfer part of the credit risk to insurance company by micro-insurance, make the money safety. And service to the rural financial market more actively. For insurance company, can help them expanding the rural market, get a more broad space for development. For government, combining microfinance and micro-insurance can improve rural financial market, so as to support the development of rural economic.At present, our country has tried three different models about combing microfinance and micro-insurance. They all have their own advantages and disadvantages. We should focus on developing microfinance combing agricultural insurance in the trend of Agricultural industrialization, and try to explore the establishment of compulsory agricultural insurance.Now this pattern also is limited by various factors and can’t provide support to agricultural industrialization and rural economic development very well. The government, microfinance institutions and insurance companies should cooperate on policy, law, productions regulatory and other aspects to provide system support and assurance for combing microfinance and micro-insurance.