Factor Analysis of Micro Insurance Development Challenges in Rural Areas

Abstract

Micro insurance is a financial arrangement to protect low-income people against specific perils in exchange
for regular premium payments proportionate to the likelihood and cost of the risk involved. Organizations
might face a number of barriers to develop micro insurance especially in rural areas; therefore it is necessary
to identify such challenges. This study investigates agricultural experts’ perception about the challenges of
micro insurance development. The factor analysis showed that the challenges can be classified into 3 latent
factors namely: educational challenges, cultural-social challenges and legal-institutional challenges. 39.1% of
total common variances are explained by these 3 factors.