By supporting and diversifying income, remittances have potential to be a valuable tool in coping with risk, acting as a form of informal “insurance” for recipients. Using data from a client math study in Kenya, the MILK Project looked at how remittance income affects the receipt of gifts from family and friends in response to a health shock, and what that means for the role of microinsurance.  

We found that those who regularly receive remittances were more likely to receive remittances specifically aimed at helping to cover the health shock than those who do not regularly receive remittances, and they received larger amounts, covering a larger percentage of health shock costs. In contrast, respondents who do not receive regular remittances do not appear to have access to as much “surplus” support from migrant friends and family who live far away. They will typically be more vulnerable in the event of a large financial shock and might benefit even more greatly from insurance. We conclude that neither remittances nor insurance are enough alone to cover the range of costs related to hospitalization; insurance appears to complement rather than crowd out remittances for this purpose.