The microinsurance project, announced this week by Germany's Allianz and aid agency CARE International, hopes to attract 200,000 customers aged 18 to 70 within a year among vulnerable people in four regions south of Chennai.

The communities themselves -- where people typically earn less than two euros (3.10 dollars) a day -- have been involved in designing the policies which will cover death, medical treatment after accidents, funeral costs and hospital expenses, as well as paying wages during illness.

"Microinsurance provides a comprehensive measure of social security in an area which desperately needs this sort of protection against accidents and shocks that can push poor communities right to the limit," said Wolfgang Jamman, national director of CARE Germany.

The scheme, aimed overwhelmingly at women, is planned to work as a cooperative system with villages clubbing together to insure their residents. They then handle the transactions of the premiums themselves, the average annual cost of which is around seven euros for a family of four.

Low literacy rates and a lack of experience in insurance in the area mean that staff from CARE will have to help people organise the cover and file their insurance claims, spokesman Michael Anthony told AFP on Wednesday.

"It is quite a challenge selling a complex product like insurance so we try to do it in a visual and playful way," using methods such as Bollywood sketches, puppet shows and songs to explain the concept, Anthony says.

"Traditionally, poor people cannot afford the premiums for insurance cover, but here we have developed a set of products the community can afford and actually wants to use," Allianz board member Werner Zedelius said.

"For us, microinsurance is a growing social business. We expect it to be profitable within the first year and plan to reinvest any profits into the project to enlarge it further."

Allianz also offers microinsurance in other Indian states as well as in Indonesia and Egypt but restricted mostly to life insurance products. It estimates the microinsurance market potential in India at well over 250 million policy holders.

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