Josep Stiglitz, a Nobel Laureate in economics in 2001, found asymmetric information theory to explain imperfect market condition from the side of information. Stiglitz argued that different conducts of market agents or actors are caused by asymmetric information they have. Is it true? I think that Stiglitzs theory on information asymmetric is not always true in explaining different conducts of market agents or actors. Such cases are partly caused by different mindset or paradigm, not by asymmetric information. Most cases, for example, in insurance market regarding decision to insure a risk or not, moral hazard behavior either those insured or those insurer, kinds of insurance products, all of which seems appropriately explained by different mindset theory rather than asymmetric information theory. In 2005-2006, I put it the first component in a development stage model (Mustafas Development Stage Model). By applying this model for all development policies, regulations, rules, programs, and projects, it is logic to apply first the component, mindset or paradigm, before setting planning. Building or developing microinsurance business, for example, needs reviewing first mindset or paradigm of all business players involved in the business, namely: consumers (insureds), producers (insurers), government (regulator), intermediate agents, so forth. Microinsurance is a relatively new insurance scheme which is different from conventional insurance in term of its market segments, namely low income entities. Its practices can be found in some countries in Asia such as Philippines, India; Africa such as Nigeria, and Latin America since 1999 till present. Existence, continuation, and expansion of microinsurance business or industry are subject to its demand by consumers, its supply by insurance firms, and its rules and regulations by government, as well as supporting entities either commercial based or non-commercial based. From this view, some aspects related to microinsurance such as microinsurance economics, microinsurance business, microinsurance rules and regulations, including microinsurance consumers protection, microinsurance development technical assistance, and so forth seem exist either from conceptual or practical sides. A natural characteristic of insurance business which is different from other businesses is that its product is a risk; not a physical product or services, which embeds for everybody or everything. From this characteristic implies for some important aspects, namely: 1) mindset about a risk and its magnitude either by producer or consumer seems a significant factor for an insurance market; 2) potential demand for or supply of insuring risks seems limitless. Mustafa Haji Alwy International Microinsurance Business Devt. Specialist for Asian Development Bank (ADB) M.Sc 2002 of Regional and Rural Development Planning Science B.Sc 1997 of Agribusiness, Socioeconomics of Agriculture the Global Institute for Sustainable-Balanced Development Owner, Founder, Head Executive Director, Principal Researcher/Scientist, Islamic Philosopher (pause)
Posted on: Thu, 13 Mar 2014 10:23:26 +0000
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