Amini is a small island in Arabian sea. The main occupation of people living in Amini is fishing. There are 5000 families in the island which depend on fishing as the main source of income. These fishermen go out in groups of 10 to do fishing. There are 500 boats which are used by this group and they go to the sea at least twice in a month for catching fish. The fish caught by them is not only used by locals but also exported. The fishing activity has been going on for many years now. The head of the Island Umdobi has been observing that every year at least one fisherman dies while out on fishing. When this fisherman dies it is a great loss to his family. The annual income of the fisherman family is around Rs 60,000. As a leader of the island Umdobi has been concerned about this, there are at least 50 families which are financially suffering because he lost the breadwinner of the family. Every time these fishermen go out for fishing, the entire families are worried till the fishermen comes back. It is a struggle every day. Umdobi has been thinking for a while for creating a solution to this problem which his community is facing. Finally, he thought he got a solution. He asked every fisherman family to pay Rs 250 every year, so he could have Rs 12,50,000. If any one dies while fishing, that family will receive Rs 12,00,000. Using this money the family could manage the income of Rs 60,000 per year for next 20 years. So for a small sum of Rs 250 per year, the family can protect the financial loss. The solution appealed to all family members of the fisherman. The no longer have to worry about their family expenses at least, if something happens to their key family member. They all agreed to pay up Rs 250 every year. As expected, soon one of the fishermen died in the sea and the family received Rs 12,00,000. Unlike other families which are financially struggling, this time the family managed to receive financial support from Umdobi. Now every year fishermen are happy to pay Rs 250 every year, so that their family will be protected by Umdobi. Now that this problem is solved, Umdobi was thinking about other issues faced by his fishermen community. He also noticed that every year at least 3 fishing boats gets damaged by rough weather at sea and those affected had to borrow money to buy new fishing boats which becomes a huge burden on the family. Another issue faced by these families is during monsoon time, some people fall sick and they had to be treated for the illness. The treatment again is expensive, and families have to borrow money if it happens to them. Based on his past experience, Umdobi decided to implement a similar solution. He estimated that cost of each boat is Rs 1,00,000 and he will need Rs 3,00,000 if he has to support the group of fishermen who lose their boat. So he decided to charge Rs 600 per boat (which was equally shared by 10 fishermen. Each fishermen had to contribute only Rs 60. Similarly the average cost of treatment was Rs 10000 and at least 100 families fell sick every year. So he decided to collect Rs 200 per family for providing treatment to 100 families, who fell sick. With this arrangement in place, the community of Amini lived peacefully. They no longer had to borrow money for unexpected financial losses like Loss of key member of the family, Loss of Boat or Medical expenses. Each family was happy to give Rs 510 every year to get financial protection from their leader Umdobi. What Umdobi created for the group is called the Insurance Facility. The principal of insurance is to provide compensation for financial risk that can happen to any one of us. To provide compensation, Insurance companies collect small amount which is called “Premium”.