The emergence of microinsurance. Craig Churchill Microinsurance Innovation Facility International Labour Organization. Overview of Presentation. Microinsurance characteristics and trends Examples of innovation Concluding thoughts. Would you insure these houses?.
Microinsurance Innovation Facility
International Labour Organization
Some insurance companies are interested in reaching new markets, including low-income households
Microinsurance is emerging out of the shadow of microfinance
Greater variety of distribution channels are being used
Experimentation with consumer education tools and methodologies is beginning
Policymakers, regulators are showing a greater interest
Product innovations are taking place to provide better coverage to more low-income people
Insurable, without access
Uninsurable through market mechanisms
POPULATIONWho is insured by whom?
Microinsurance is not just a scaled down version of regular insurance…the product and processes need to be completely reengineered to meet the characteristics and preferences of the low-income market.
Large number of lowincome people making informed choices to manage risk
MICROINSURANCE INNOVATION FACILITY
see Grantee Community on www.ilo.org/microinsurance for details
Project: Term life insurance & savings for tea workers in Assam
Partnership with tea estates
Software to reduce transaction costs and increase customer services
Product simplification & transparency
Education via NGO partner
Ability to create savings & insurance culture
Developing sustainable products that meet the needs of the market
Reducing transaction costs (enhancing affordability)
Overcoming the market’s natural resistance and educational barriers
Getting products to the market: distribution
Adopting a microinsurance approach to premium collections and claims payments
Creating microinsurance experts
Promoting an enabling environment for microinsurance
Having better data to price products
Developing a database of product and institutional performance benchmarks
Assessing the impact: do the poor really benefit from insurance, and if so, under what circumstances
When the early Victorian insurance companies were first approached with suggestions that they should offer (insurance) to the poor, the short answer generally given was, in effect, that security was a luxury for which the poor could not afford to pay.
The suggestions, however, were pressed. It was observed that for many centuries the poor had somehow contrived, by their own co-operative thrift, to provide some sort of financial security for themselves; and with some misgivings experiments were launched to see whether such security could be sold to them on commercial terms which would both give them at least as good a return as they were deriving through their spontaneous organizations, and enable the sellers to live on the proceeds of the trade. This is the origin of industrial assurance, which is simply life assurance adapted to the needs of weekly wage-earners.
Industrial assurance began timidly and on a small scale; but it met a felt need, and consequently developed at a pace for which its founders were unprepared. While it was most rapidly expanding it was already being extensively reconstructed, as the mistakes of the experimental stage were discovered and retrieved.
Dermot Morrah, A History of Industrial Life Assurance, Routledge (1955)
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