Insurance plays a critical role in protecting people against unexpected risks, yet large sections of the population — especially in developing countries like India — remain uninsured. To bridge this gap, two innovative models have emerged: Microinsurance and Peer-to-Peer (P2P) Insurance. Both are reshaping how individuals and communities access financial protection, though they are at very different stages of adoption in India.

What is Microinsurance?

Microinsurance is designed specifically for low-income households, offering affordable coverage for risks such as health, life, agriculture, livestock, and natural disasters. Premiums are kept very low, with equally modest coverage limits, making it accessible to those who cannot afford traditional insurance.

Features

· Low premiums and simplified contracts

· Group-based distribution via NGOs, MFIs, and cooperatives

· Mobile and digital platforms for premium collection and claims

· Coverage tailored to rural and underserved communities

Microinsurance in India

India was one of the first countries to formally regulate microinsurance. The Insurance Regulatory and Development Authority of India (IRDAI) issued Microinsurance Regulations in 2005 (updated in 2015) to encourage insurers to reach low-income groups.

Examples in India

· LIC’s Jeevan Mangal: A term insurance micro plan with premiums starting at just ₹15 per week.

· SKS Microfinance & ICICI Lombard: Partnership to provide health microinsurance for rural borrowers.

· Agriculture Insurance Company of India (AIC): Crop microinsurance covering risks from drought, flood, or pests.

· Government schemes: Programs like Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Ayushman Bharat extend low-cost insurance.

What is Peer-to-Peer Insurance?

Peer-to-Peer (P2P) insurance is a community-driven model where groups of people pool their premiums to cover each other’s risks. Instead of all premiums going to a traditional insurer, part of the fund remains within the community pool, and unclaimed money can be refunded or donated. This model emphasizes trust, transparency, and fairness.

Features

· Members form groups with shared risks

· Claims are paid from the pooled fund

· Surplus funds are redistributed or donated

· Often managed via digital or blockchain platforms

P2P Insurance in India

Unlike microinsurance, P2P insurance is still in its infancy in India. While community-based risk sharing is not new — chit funds, self-help groups, and cooperative societies have practiced it informally for decades — formal digital P2P platforms are yet to be widely adopted.

Current Status

· Regulatory hurdles: IRDAI currently requires insurance to be offered only by licensed insurers, limiting peer-run pools.

· Early experiments: Some insurtech startups and pilot projects are testing blockchain-based insurance for farmers and gig workers.

· Global inspiration: Models like Lemonade (USA) and Friendsurance (Germany) are being studied by Indian startups.

The Future of Microinsurance and P2P Insurance in India

· Digital Transformation: With India’s rapid adoption of UPI, mobile wallets, and insurtech apps, both models can scale faster.

· Government Push: Inclusion programs like Ayushman Bharat and PM insurance schemes will expand microinsurance penetration.

· Gig Economy Protection: Millions of gig workers need flexible, community-driven (P2P) insurance models.

· Climate Resilience: Farmers face rising climate risks, making affordable crop and weather insurance a priority.

· Regulatory Evolution: IRDAI may gradually open doors for P2P experiments in health, agriculture, and micro-enterprises.

Conclusion

Microinsurance is already a pillar of financial inclusion in India, protecting millions of low-income families from falling into poverty due to health shocks, accidents, or crop losses. Peer-to-Peer insurance, on the other hand, is still an emerging concept in India, but its promise of transparency, trust, and community-driven protection makes it a model worth watching.

Together, these approaches highlight a future where insurance is not just a privilege for the wealthy, but a universal safety net accessible to every citizen.