Post on 05-Dec-2014
description
Developing Inclusive Insurance Markets
Craig ChurchillILO’s Microinsurance Innovation Facility
Discussion flow
1. The ILO’s Microinsurance Innovation Facility
2. What is microinsurance?
3. The different stages of market development
4. The case of Zambia
5. The case of the Philippines
6. Concluding thoughts
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1) The ILO’s Microinsurance Innovation Facility
Mission“Our mission is to increase the availability of quality insurance for the developing world’s low-income families to help them guard against risk and overcome poverty”
Beliefs“We believe in the power of insurance to change people’s lives, to protect their health and their assets, and to give them peace of mind to make investments for the future”
Launched in 2008 Housed at the International
Labour Organization based on the work of the Microinsurance Network
US$34 million grant from the Bill & Melinda Gates Foundation
Additional support provided by Zurich, AusAID and Munich Re Foundation
Supported over 60 action research partners across Asia, Africa and Latin America
Dissemination through
workshops, conferences, publications, website, etc.
Innovation
grants
Capacity
building
Innovation grants
Capacity
building
1) Our activities
Action Research Partners
New and improved products and models
+Better informed
consumer=
Improved risk management practices
among the working poor
1) Our work 2008-2013 A
bou
t u
s
2. What is microinsurance?
“…not a specific product or product line. It is also not limited to a specific provider type. Microinsurance is the provision of cover to a specific market segment, i.e. low-income persons.” ~ IAIS Issues Paper (2007)
A new market opportunity for the insurance industry to make itself relevant for the majority of the population who do have have insurance.
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2. And why do we care?
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Outcomes & Impacts Evidence available
Financial protectionLower out-of-pocket expenses 15 5Less burdensome risk-management strategies 12 Higher investment and production 10
Better healthAccess to health services 7Utilization of health services 14 3 Improved health outcomes 10 4
3. Stages of market development
Nascent
Few MI products, mainly credit life
Growing
Simple products are scaled up
Diversifying
More complex products are developed
Competition
Clients have choice of products
and providers
Increase in quality products, diversity of distribution channels, and demand by consumers
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3. Barriers to market development
• Awareness and interest
• Skills (basic)• Data• Understanding &
trust
• Limited distribution channels
• Viability concerns• Product value
• Skills (advanced)
• Effective public-private partnerships
• Consumer protection
9 • Supply side• Demand side
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3. The stakeholder approach
Many stakeholders can impact the development of inclusive insurance.
There is a need for a coordinated and systematic process for market development, where capacity building, research in the pre-competitive space and innovation would be collectively designed and shared.
Risk carriers, delivery
channels and associations
Regulators and
supervisors
Policy makers
Enablers and donors
3. Stages of development: Zambia and the Philippines
Nascent
Few MI products, mainly credit life
Growing
Simple products are scaled up
Diversifying
More complex products are developed
Competition
Clients have choice of products
and providers
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ZAMBIA PHILIPPINES
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4. Zambia: Microinsurance before 2009
Regulation
• No specific regulations on microinsurance
• Supportive regulator
• Hesitant and risk averse providers
Product
• Product offerings narrow and limited
• Mismatch between demand and supply
• Inappropriate and unaffordable products
• Complex and complicated contracts
Consumer Awareness
• Low understanding
• Limited experience
• Misconceptions• Distrust of
insurers
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4. Zambia: Accelerating microinsurance development
• Conducted a diagnostic assessment: opportunities and barriers for inclusive insurance markets
• Created a steering committee (SC) and multi-stakeholder technical advisory group (TAG) to oversee strategy development and implementation process
• Microinsurance development strategy/action plan finalised in January 2010
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4. Zambia: Microinsurance development process
Regulatory review and formulation
Supplementary studies on the
supply side
Business opportunity awareness
Capacity building
interventions
Supporting product
development and marketing
Consumer education
and product awareness
• Technical assistance to regulator
• Industry consultative workshops
• Supplier assessment study
• Aggregator study• Finscope analysis
• Microinsurance Innovation Seminars
• Exposure visits
• Capacity diagnostic study• Training workshop• Technical assistance• Microinsurance Acceleration
Facility
• Microinsurance marketplace
• Media programmes• Technical assistance
to insurers and distributors
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4. Zambia: Market developments
2012
5 active insurers (Life)and 3 in the pipeline (non-life)
CoverageLife: 220,000+
Credit life: 115,000+
Broader distribution: MFIs, banks, mobile network
operators, labour unions, post office, microenterprise
associations, community based agents
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2009
2 active insurers among 12 insurers
Less than 1% microinsurance penetration
Mainly credit life
< 90,000 policyholders estimate
Limited distribution mainly via MFIs and banks
• Performance standards formulated• Alternative dispute resolution
mechanism established
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Market Conduct Product Innovation and
Development
Financial Literacy and Advocacy
Consumer Value and Protection
POLICY AND REGULATORY
ENVIRONMENT
• Microinsurance defined• Microinsurance providers identified• Formalization process clarified• Microinsurance agents/Brokers created • Reporting standards established• MBA Chart of Accounts Revised
• Prototype product developed: composite product
• Contracts simplified
• Branding and slogan conceived• Trainings on MI advocacy and seminars
5. Philippines: Key interventions
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5. Philippines: Market developments
201235 Commercial insurers
(Life – 17, Non-life 18)
19 Mutual Benefit Associations
89 Products approved
(Life – 38, Non-life – 25, MBAs – 26)
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2008
2 Commercial insurers
6 Mutual Benefit Associations
7 Products approved
About 3 million individuals covered –50% informal
insurance, mostly credit life
About 12 million individuals covered – excluding
government sponsored schemes
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6. Concluding thoughts
• Market development can be accelerated
• Need for in-depth analysis of the barriers for market development
• Create buy-in through a well-structured stakeholder process
• Leadership by supervisor and key industry persons is critical
• Customize intervention to support progressive development
• Goal, action plan, strategy, market development interventions, performance indicators
• A coordinator is needed to facilitate the process of implementing the action plan
• Focus on generating scale and consumer value, and ultimately consumer protection
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Discussion, Q&A
Craig Churchill
International Labour Organization
Tel +41 22 799 6242 Email churchill@ilo.org