The provision of micro finance services like savings and credit to the poor is well recognized as an effective instrument to address poverty. However, the poor face many risks or shocks, which make them vulnerable, despite access to savings and credit services through microfinance. Poverty is not only a state of deprivation but also a state of vulnerability. Poverty and vulnerability are closely related. The sources of risk include expensive illness, death of a breadwinner, natural calamities (flood, drought, animal diseases, crop failure, etc.), the need to meet customary obligations (weddings, funerals), political instability, communal riots and market shocks, etc. The coping mechanisms against such crisis lead the poor into a situation of further debt and impoverishment. Insurance services extend the coping capacity of the poor to a next level of leverage complementing the role of savings and credit in addressing their poverty and vulnerabilities.

In the Indian context, the existing micro insurance schemes by the mainstream service providers do not adequately address the needs of the client system; so is the case with Bangladesh and Sri Lanka. The concept of mutuality is well expressed and established in many of the community based microfinance operations. Many experiments in the field have proven the feasibility of applying the concept of mutuality in delivering micro insurance services to the poor. In such cases they become purely member owned, controlled and managed and hence provide a greater flexibility to the members in terms of products and services.

With this background, the study focuses on the relevance of microfinance and micro insurance tools in providing social security to the disaster prone areas of India, Bangladesh and Sri Lanka for disaster management. Mapping the vulnerabilities of the disaster prone communities, investigating how they cope with such vulnerabilities, the present indigenous and other social security mechanisms, the reach and relevance of micro insurance products / packages available for them and the scope for promotion of micro insurance mutual integrating with the microfinance services will also be included in the study. Moreover, the role of NGOs, insurance sector, government, and donor for innovative micro insurance partnerships would be focused as part of this study.

The study would cover the select Tsunami, cyclone & flood affected areas in South India, Sri Lanka & Bangladesh. The rationale of conducting the study in these countries is to understand the social security mechanisms through microfinance and micro insurance for disaster management of the disaster prone - vulnerable poor in South Asian context. Also, the above three countries have witnessed the adverse effect of Tsunami in the year 2005. Moreover, the study will help to identify the gaps at policy level for integrating disaster risk reduction with the existing microfinance and micro insurance programmes and products for South Asia.

The study is collaborative in nature identifying and involving the appropriate institutions from India, Bangladesh and Sri Lanka to undertake the research, and Oxfam, America and Provention Consortium for financial, technical and dissemination support.

The over all aims of the Study are to (1) find out the impact of micro finance and micro insurance tools in reducing disaster risk and facilitating post disaster recovery, (2) Make policy and product recommendations for enhancing the potential of MF & MI for disaster risk reduction. Specific objectives of the research are to:

• Map disaster risk, livelihood vulnerabilities and financial coping strategies of communities in hazard prone areas.
• Understand the available social security mechanisms and how did they contribute to recovery in the aftermath of recent disasters
• Study the contribution of Micro finance and Micro Insurance as social security mechanisms.
• Analyze existing Government policies on communities based Micro finance and Micro Insurance
• Make policy and product recommendations including reinsurance mechanisms for making MF & MI effective tools for disaster recovery and risk reduction.

The study is envisaged to cover 500 disaster affected sample households inclusive of 100 control households from the severely affected parts of each country. The households not involved in microfinance and micro insurance is referred as control group.

• Economically poor households would be selected on the basis of appropriate sampling technique.
• Along with the interview method through structured interview schedule, various tools of participatory learning methods (PALM) will be applied to study the vulnerability context of the coastal fisher communities.
• Focused group discussion method would be employed for understanding their social security mechanisms, indigenous practices of risk reduction, contribution of microfinance and micro insurance for disaster risk reduction, etc.
• Interview with the insurance companies, NGOs and MFIs through structured or semi-structured interview schedules are also envisaged as a part of the research to understand the problems and prospects of microfinance and micro insurance to reduce disaster risks and vulnerabilities.
• The photo and video documentation incorporated along with the study process.