The rural poor and vulnerable groups of the population are most often unaware of the existence of insurance as a tool for risk management and the need to plan for their long term financial requirements. Informal means of coping with risks form an integral part of their everyday existence but poor households often fail to understand the concept of formal risk management. They possess an insular understanding of varied insurance services available, face barriers in the usage of these services, fear banking procedures and technologies and are ignorant of the high costs that are incurred by not using formal financial services like insurance.

Financial literacy programmes has the potential to bring into the mainstream a large section of the population who use informal means of risk mitigation which is far from adequate to deal to with highly frequent and correlated risks. Financial literacy for risk management can help the poor to identify the varied risks they face, identify the required risk management mechanisms to address their needs, weigh their costs and benefits and make an informed decision based on the available choice.

Formal financial institutions may not respond to their specific risks of low income households and further the lack of trust in corporate agents can curtail the penetration of financial services to resource poor geographies. Whereas, financial literacy through the use of local agents, SHGs, community groups and Grama Sabhas enables Service Providers to engage with the rural consumers and understand their financial behaviour. This in turn enhances their ability to offer customized services which are specifically designed to address local needs. Even after a successful product is designed which addresses the demands of resource poor consumers, insurance literacy is necessitated to attain a certain level of efficiency in low income markets and also help expand the scale of markets. To a certain extent, micro insurance could help solve the supply side issues by developing better and more customized products for the poor and the demand side issues could be aided through financial literacy programmes which helps create awareness about varied financial services.

In this context, the insurance literacy programme in CIRM is designed with the following objectives:

•  To help rural communities understand varied risks and the role of formal financial services in addressing them.
• To help them understand the concept, structure and process of risk management mechanisms and inform them of the available financial services which can help the poor make an informed decision
• To help vulnerable groups in identifying and articulating the risks faced by them which would help in developing and delivering services responsive to the client's needs

The Centre follows a training of trainers (TOT) method to carry out literacy programmes. The trainers at the community level follow a group approach and/or individual approach in the local communities to impart insurance literacy programmes. The group approach involves training sessions which are conducted through existing groups, such as SHGs, community groups and farmers groups. The choice of groups as a unit of knowledge dissemination ensures time and cost efficiency. It also provides a platform for discussion and clarification of doubts between the local population and the trainer. The individual approach on the other hand would include an individual counseling session with each person in the target group aimed to identify individual needs and promote financial risk management training on a one-to-one basis.

The need for innovative media of communication among vulnerable groups is required as the concept of micro insurance has to be made simple and comprehensive as the target audience is often non-literate or semi-literate. The importance of formal risk management mechanisms is conveyed through audio visuals, street plays, comic strips, animation, posters and short documentaries.

The programme of Financial Literacy for Risk Management at CIRM cuts across all the verticals namely, Health, Livelihood and Catastrophe risks.