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 Improving Access to Microinsurance Key
Considerations

• Access to Insurance for the Poor
• May 2007
• Rio de Janeiro, Brazil
• Michael J. McCord
• The MicroInsurance Centre

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A comprehensive landscape study of low-income
people in the worlds 100 poorest countries
conducted by the MicroInsurance Centre found that
only 3 (78m) of the low-income population are
covered by formal microinsurance. Without the
largest 5 microinsurers, this value falls to 15.4
million.
Microinsurance Availability
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Microinsurance Coverage - Americas
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What is Success in Microinsurance?

• Insurers
• Profitability
• Expansion of risk pool and market
• Delivery channels
• Additional income stream
• Competitive advantages
• More stable clients / members
• Low-income market
• Affordable, accessible, responsive products that
  help reduce risk

WIN WIN WIN
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Microinsurance Supply Chain
REGULATIONS and SUPERVISION The foundation of
sound consumer protection
DONORS Strengthening the weak spots
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Supervision

• Issues
• Understanding MI requirements
• Simple processes, documents, procedures
• Addressing unlicensed insurers
• General supervision capacity
• Regulation as life, general, or health insurance
  often different and under different supervision
• Balancing consumer protection with innovation and
  flexibility
• Thoughts
• IAIS - Issues paper and discussions
• Peru and India with microinsurance legislation

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Re-Insurers

• Munich Re in Colombia
• Limited role with basic products

• Providing some pricing and product development
  assistance
• Large role with index-based insurance

Photo Munich Re Group
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Insurers

• Many are profitable
• Limited market information
• Limited to life, general, or health insurance
• Not yet moving significantly from basic products
• Demand and supply mismatches
• Need greater innovation in
• Product design - SIMPLICITY
• Processes
• Controls
• Systems
• Must focus on simplicity
• New technologies

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Delivery Channels

• They can make create efficient and effective
  access to the low-income market
• However
• Agents versus Brokers (1st vs. 2nd tier
  objectives)
• Poor training of front line staff
• Poor marketing efforts
• Limited understanding of the market
• Voluntary versus mandatory
• MFI, though structurally perfect for MI delivery,
  generally have not been satisfactory
• Better incentives needed

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Policyholders (the market)

• Will respond to good products
• Lack understanding of MI
• Bad attitude towards MI
• Market education leading to appreciation is
  needed
• Identify effective groups with low income people

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Factors in Microinsurance Purchases, or, How to
get people to buy microinsurance
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Donors
World Bank ILO KfW GTZ CIDA SIDA Gates
Foundation CGAP AsDB Munich Re
Foundation IADB DfID CIDR USAID IDRC IFAD
UNCDF UNDP Ford Foundation IFC

• Donors role is in research and development
• Donors should not replace or compete against
  commercial investment with new insurers
• Until now, the donor role has been relatively
  limited
• Insurers themselves have made investments to make
  microinsurance work for them
• Investors have had limited opportunities

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Support Structures (Meso Level)

• Weak meso level structures
• Actuaries
• Risk data
• Insurance market education
• Insurance associations and institutes providing
  MI trainings and programming
• Quality health care facilities
• Free health care typically does not work

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Conclusion

• Microinsurance can be a WIN WIN WIN
  proposition
• We are still in the early days of research and
  experimentation
• Addressing issues at each level of the supply
  chain will bring the best results

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The MicroInsurance CentreDeveloping
partnerships to insure the worlds poor
www.MicroInsuranceCentre.orgmjmccord_at_MicroInsur
anceCentre.org