Post on 02-Jun-2018
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What is Microinsurance?
Access to I nsurance for the Poor
May 2007
Rio de Janeiro, Brazi l
Craig Churchill
International Labour Organization
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What is the ILO?
Specialized UN agency created in 1919
Promotes social justice and human and labour rights
Forum for governments to engage with employers
and workers organizations (tripartite structure)
Formulates international labour standards
(Conventions and Recommendations)
Provides assistance to member states and socialpartners in implementing standards
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ILOs interest in microinsurance
The ILO is concerned about:
The promotion of decent work: more and better
jobs
The availability of social protection for workers
and their families
The impact of financial polices on social justice,
i.e. toward more inclusive financial markets
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The ILO: A microinsurance microcosm
In the ILO, and elsewhere,
microinsurance can be seen from two
complementary perspectives
1) A way of extending social protection
to excluded populations
2) A new marketfor the insuranceindustry
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The microinsurance continuum
Social Protection
Benefits are a human right
(e.g. health, pension)
Contains a redistributive
element
New Market4 billion persons living on
less than $2/day
Product and distribution
innovations can make the poor
a viable market for insurers
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What is microinsurance?
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Microinsurance is
the protection of low-income peopleagainst
specific perils in exchange for regular premium
payments proportionate to the likelihood and cost of
the risk involved~Draft Donor Guidelines, CGAP Working Group (2003)
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)
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Informal insurance
Insurable, without access
Uninsurable through market mechanisms
Formal insurance industry
WEALTH
POPULATION
Who is insured by whom?
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Characteristics of the insurable poor
Vulnerable to risks
Often work in the informal economy
Irregular cash flows Manage risks through myriad of informal
means, including social networks
Limited familiarity with formal insurance May not trust insurance companies
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To what risks and economic stresses
are low-income persons vulnerable?
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http://www.ilo.org/dyn/media/mediasearch.fiche?p_lang=en&p_id=4172&p_format=POWERhttp://www.ilo.org/dyn/media/mediasearch.fiche?p_lang=en&p_id=140&p_format=POWERhttp://www.ilo.org/dyn/media/mediasearch.fiche?p_lang=en&p_id=5954&p_format=POWERhttp://www.ilo.org/dyn/media/mediasearch.fiche?p_lang=en&p_id=3293&p_format=POWERhttp://www.ilo.org/dyn/media/mediasearch.fiche?p_lang=en&p_id=7285&p_format=POWERhttp://www.ilo.org/dyn/media/mediasearch.fiche?p_lang=en&p_id=7316&p_format=POWER8/10/2019 MICRO INSURANCE.ppt
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What risks are they concerned about?
Country Priority risk
Uganda Illness, death, disability, property loss, risk of loan
Malawi Death, food insecurity, illness, education
Philippines Death, old age, illness
Viet Nam Illness, natural disaster, accidents, livestock disease
Indonesia Illness, childrens education, poor harvest
Lao P.D.R. Illness, livestock disease, death
Georgia Illness, business losses, theft, death, retirement incomeUkraine Illness, disability, theft
Bolivia Illness, death, property loss (including crop loss in rural areas)
Adapted from Cohen and Sebstad (2006)
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What risks are they concerned about?
Country Priority risk
Uganda Illness, death, disability, property loss, risk of loan
Malawi Death, food insecurity, illness, education
Philippines Death, old age, illness
Viet Nam Illness, natural disaster, accidents, livestock disease
Indonesia Illness, childrens education, poor harvest
Lao P.D.R. Illness, livestock disease, death
Georgia Illness, business losses, theft, death, retirement incomeUkraine Illness, disability, theft
Bolivia Illness, death, property loss (including crop loss in rural areas)
Adapted from Cohen and Sebstad (2006)
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How is insurance delivered to the
poor?
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Regulated insurance companies that serve thelow-income market directly (e.g. Delta Life,
Bangladesh)
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Regulated insurance companies that
serve that have created
microinsurance agents
(e.g. Tata-AIG, Bangladesh)
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Insurance companies
that target the low-income market throughretailers (e.g. SegurosAzteca and Electra,Mexico)
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Community-based schemes that pool funds, carry risk and
manage a relationship with a healthcare provider (LUnion
Technique de la Mutualit Malienne, Mali)
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Insurance distributed
through cooperatives
(e.g. Yeshasvini, India)
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Mutual insurance companies
created by credit
union/cooperative
federations (e.g. TUW
SKOK, Poland; La Equidad,
Colombia)
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Most common types of microinsurance
products
Credit life
Term life/Personal accident
Savings life Property insurance
Endowment life
Health insurance Agriculture
DegreeofDifficulty
DegreeofSuccess
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Key differences between micro and
conventional insurance
Continued
Conventional Insurance Microinsurance
Premium collected mostly from
deductions in bank account
Premium often collected in cash or
associated with another financial transaction
Regular premium payments Premiums should be designed to
accommodate customers irregular cashflows
Agents and brokers are primarily
responsible for sales
Agents may manage the entire customer
relationship, perhaps including premium
collection
Market is largely familiar withinsurance
Market is largely unfamiliar with insurance
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Key stakeholders in the development of
microinsurance
Potential and current policyholders
Actual and potential delivery channels
Risk carriers
Industry associations, networks
Insurance infrastructure: training, technicalassistance, research, data warehousing
Policymakers, regulators and supervisors
Donors and development agencies
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Thank you!
Craig Churchill
churchill@ilo.orgTel +41 22 799 6242
mailto:churchill@ilo.orgmailto:churchill@ilo.org