Microinsuranceoverview

Craig Churchill Microinsurance Innovation Facility

International Labour Organization

Would you insure these houses?

Would you insure these farmers?

Would you insure these assets?

Or these?

Would you insure these lives?

Overview of Presentation

1. Microinsurance stats and trends

2. Examples of innovation

3. Common mistakes

Survey results

Microinsurance in AfricaOwn survey, data as of end 2008

0

1'000'000

2'000'000

3'000'000

4'000'000

5'000'000

6'000'000

7'000'000

8'000'000

9'000'000

10'000'000

Credit l ife Other life, funeral, PA Health Agriculture Other property0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%outreach (lives covered)

penetration (%)

• 14.7 million people in Africa covered by 227 microinsurance providers• USD 257 million in premiums received in 2008• 2.6% of the population living under USD 2 per day

Microinsurance product irony

• Credit life• Funeral insurance• Term life/Personal accident • Property insurance• Endowment life• Agriculture• Health

Diff

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lty S

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Products in greatest demand are least available

Microinsurance trends

• Insurance companies are increasingly interested in serving 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 (e.g. Access to Insurance Initiative)• Product innovations are taking place to provide more

valuable coverage

Phase I: •Mandatory; Credit linked (MFIs)•Simple products: Life, funeral•Easy to administer

Phase II: •Greater product sophistication; voluntary•New distribution channels•Increasing benefits, choice, outreach

Phase III: •Use of technology•More complex products: health, agriculture,

composite•Multiple partners (e.g. hospitals, mobile phone

provider, public-private partnerships)

Product Evolution

Overview of Presentation

1. Microinsurance stats and trends

2. Examples of innovation

3. Common mistakes

Overview of the Facility’s Grantees

see Grantee Community on www.ilo.org/microinsurance for details

Africa Latin America/ Caribbean

Asia Other

Institutional models

SCC/CIC/NHIF (Kenya) Old Mutual (South

Africa)

La Positiva (Peru) AMUCCS (Mexico) Seguros Argos (Mexico) Protecta (Peru) Zurich Brazil

PWDS (India) Pioneer Life

(Philippines) Radol (Bangladesh)

Health CIDR/UMSGF (Guinea) Calcutta Kids (India) VimoSEWA (India) Care Foundation (India) SSP (India)

Microfund for Women (Jordan)

Property / Agriculture

Hollard (South Africa) Planet Guarantee (Mali)

People Mutuals (India) DID/SICL (Sri Lanka) IFFCO-Tokio (India) WRMS (India)

Life /Accident UAB (Burkina Faso) AIC (Haiti) Seguros Futuro (El

Salvador)

PICC (China) ICICI Prudential (India) Max New York Life

(India) Prime General

Insurance (Mongolia)

Consumer education

Microfinance Opportunities (Kenya)

CNSEG (Brazil) Fundaseg (Colombia)

Freedom from Hunger

Other CIRM (India) Guy Carpenter

Innovative Distribution Channels

Collaborating with national consumers’ association for rural water rights to develop life, health, personal accident and funeral insurance products for farming families, with premium payments collected with water bills

Launching a property insurance product sold through retailers and suppliers of cell phone airtime

Distributing life insurance and savings product for the families of migrant workers through churches and schools

Product innovation: Life

A simple, tangible savings and insurance product sold through small retailers

Includes death and accident coverage based on account balance, irregular savings as low as USD 0.22

Does not lapse

Microfund for Women, Jordan

Product innovation:Health

Pilot the “Caregiver” product – cash payments when a client or a family member is hospitalized.

Benefits for lost wages, transportation, accommodation (not for medical expenses)

Includes family members

Product innovations:Health

Out-patient cover using hand held terminals for tele-medicine and

insurance (India)

Product Innovations:Agriculture

Crop insurance programme based on a weather or area-yield index to protect farmers, their assets and their crops

DHAN Foundation

Product innovations:Livestock

Livestock insurance testing RFIDs to reduce fraud

Satellite index of vegetative cover for livestock insurance

Cooperative Insurance Company, Kenya

Product innovation: Composite

Bima ya Jamii: “Basket” product with the National Health Insurance Fund (NHIF)

Family (up to 7 members) coverage: In-patient health, AD&D, loss of income due to accident, funeral expenses

Selling through MFIs, SACCOs and other cooperatives

Emphasizing training and consumer education for distribution channels and their members

Overview of Presentation

1. Microinsurance stats and trends

2. Examples of innovation

3. Common mistakes

Overview of Presentation

1. Microinsurance trends and characteristics

2. Examples of innovation

3. Concluding thoughts

Common Mistakes(1)

• Only part of someone’s job• Standard targets, incentives• No solutions to overcome institutional inertia

1) Organizational development

• Relying on agents and brokers• Not designing mutually beneficial partnerships with alternative

distribution channels• Not managing the relationship

2) Partnerships and distribution

• Expecting fast results, impatience• Optimistic projections regarding uptake and renewals• Standard corporate overhead costs

3) Business model

Common Mistakes(2)

• Off the shelf with a smaller sum assured• No market research, don’t know target market’s needs and preferences• Complications and exclusions• Lumpy premiums, due at the wrong time• Not making the intangible tangible

4) Product design

• No information for mandatory products• Marketing without education• Insufficient training and incentives for sales staff• Prioritizing new sales instead of renewals

5) Consumer education and sales

• Rejecting claims without public relations backup• Delays in paying claims

6) Claims

Thank you!

Craig Churchill

churchill@ilo.org

Tel +41 22 799 6242

www.ilo.org/microinsurance