Some interesting theoretical work has been done recently on using groups as a means of administering microinsurance, not just microcredit. Whereas the Western insurance model is often predicated upon individual or family coverage, a group structure in developing countries could greatly reduce moral hazard in situations where the monitoring of illnesses & claims isn’t easy. Of course, an obvious pitfall here is that groups might select against people with pre-existing conditions, if allowed to choose their own groups (which has been shown to have positive results in microcredit). It’d be very interesting to look at the types of incentives that might push groups to include people who are already sick, if the insurer felt that was part of its social purpose.
[NB: I am repenting of my earlier habit of writing for my own edification without linking to articles, because the citation for this one is buried under several hundred unclearly-named PDFs on my hard drive. It will be updated if I find it.]
