Why is insurance widely available to those in the developed world, but not the poor—whose demand for insurance, given how close they live to the economic brink, is arguably greater? The answer is simple: transaction costs. The cost of selling and underwriting insurance and of administering a claim does not decrease in proportion to the value of the policy. Using traditional channels and processes, insurance companies simply cannot write policies with values below a certain floor without pricing them unrealistically.

Read more: http://mmublog.org/global/will-mobile-money-bring-microinsurance-to-the-poor/