A recent article in Time magazine (http://bit.ly/H8rac) discussed why the world's poor don't buy insurance. This is something that I have been thinking about for a few years now. Recent wave of earthquakes, tsunami, floods made me think about this again. I wrote an article about this a few years ago titled "Monsoon Hedging" (http://tr.im/mhedge) My argument essentially is that at the individual level, people, particularly the poor, are more comfortable relying on informal, social insurance mechanisms but these mechanisms are inadequate. Social institutions, such as churches, synagogues, temples, NGOs and even local governments, however, can take advantage of formal insurance mechanisms. Thus an appropriate combination of formal insurance mechanisms (bought by institutions, not individuals) and informal social insurance mechanisms will go a long way towards providing adequate protection against suffering caused by life's vicissitudes.