Microinsurance
New markets and technologies suggest bright future for microinsurance
On 8 July, the ILO’s Microinsurance Innovation Facility assembled experts from the industry’s leading insurance providers to share the lessons learned from their experiences and to discuss the future of the industry.
Microinsurance has gained considerable momentum in recent years, and the trend appears to be growing. Today, there are nearly half a billion microinsurance policies, compared to just 135 million in 2009.
For poor families in emerging markets and developing countries, microinsurance is an important tool for protecting the health and livelihoods of low-income people. It is also a means by which many can insure their crops, livestock and other property from the risks associated with natural and other disasters.
On 8 July, the ILO’s Microinsurance Innovation Facility assembled experts from the industry’s leading insurance providers to share the lessons learned from their experiences and to discuss the future of the industry.
The Facility, initially launched with funding from the Gates Foundation, aimed to develop new and targeted insurance products to promote decent work for tens of millions of low-income people in the developing world. In her opening address, Evelyn Stark, Senior Program Officer of the Bill and Melinda Gates Foundation, stated that the programme brought tremendous value to clients by helping them manage economic hardships and has provided business with important knowledge on how to create more inclusive insurance markets.
Speaking to the group assembled at the Credit Suisse offices in New York, Craig Churchill, the Facility’s Team Leader, moderated the discussion, which focused on ways in which companies can bring value for their clients, while also ensuring the profitability of their businesses.
“Microinsurance is not a charity,” Churchill said. “There is a real business opportunity for insurance companies that enter the low-income market.”
However, despite its massive growth and profit potential, millions of poor households still lack access to microinsurance products. Industry representatives presented their experiences and ideas on how providers can work to increase access to better services and innovative products.
“Delivering microinsurance requires a unique approach,” said Nelson Kuria, Chief Executive Officer of CIC Insurance Group, a Kenya-based cooperative. “You may have some clients who come to file a two-dollar claim. That may not be a lot of money for you, but it is for them. And you need staff and a business model that are sensitive to that.”
Lourdes del Carpio Gómez de la Torre, Director, Rural Insurance, La Positiva Seguros y Reaseguros in Peru talked about how online training courses for staff can lower administrative costs and make plan administration more affordable.
“Before we only did on-site workshops,” she explained. “But we had really low attendance, since in rural areas it can be difficult to go from one place to another. Through the e-learning course and other initiatives, we were ultimately able to reduce promotion and capacity building costs by 80 per cent.”
For Thembisa Mapukata, Executive Head of the Foundation Market at Old Mutual, South Africa, the automation of key administrative processes contributed not just to lower expenses but also to better client servicing in the form of reduced enrolment time from 7 to 3 days and faster claims settlement from 17 to 5 days.
Technology in staff training, claims processing and fraud control were common themes among the presentations as was organizational structure. Organizational structure, defining roles and responsibilities between insurance companies and their vendors, was also discussed.
“The more and more we outsourced the work, the less and less control we had and the higher the cost was,” said Birendra Mohanty, Vice President, Financial Inclusion Solutions Groups of ICICI Lombard, India. “When we brought claim settlement services in house, we began to see significant reductions in our costs. This also translated to improved client experience, as claims were settled faster, and grievances have fallen substantially.”
Housed at the International Labour Organization's Social Finance Programme, the Microinsurance Innovation Facility seeks to increase the availability of quality insurance for the developing world's low-income families to help them guard against risk and overcome poverty.
For poor families in emerging markets and developing countries, microinsurance is an important tool for protecting the health and livelihoods of low-income people. It is also a means by which many can insure their crops, livestock and other property from the risks associated with natural and other disasters.
On 8 July, the ILO’s Microinsurance Innovation Facility assembled experts from the industry’s leading insurance providers to share the lessons learned from their experiences and to discuss the future of the industry.
 ILO Photo / J. Suministrado |
Speaking to the group assembled at the Credit Suisse offices in New York, Craig Churchill, the Facility’s Team Leader, moderated the discussion, which focused on ways in which companies can bring value for their clients, while also ensuring the profitability of their businesses.
“Microinsurance is not a charity,” Churchill said. “There is a real business opportunity for insurance companies that enter the low-income market.”
However, despite its massive growth and profit potential, millions of poor households still lack access to microinsurance products. Industry representatives presented their experiences and ideas on how providers can work to increase access to better services and innovative products.
“Delivering microinsurance requires a unique approach,” said Nelson Kuria, Chief Executive Officer of CIC Insurance Group, a Kenya-based cooperative. “You may have some clients who come to file a two-dollar claim. That may not be a lot of money for you, but it is for them. And you need staff and a business model that are sensitive to that.”
Lourdes del Carpio Gómez de la Torre, Director, Rural Insurance, La Positiva Seguros y Reaseguros in Peru talked about how online training courses for staff can lower administrative costs and make plan administration more affordable.
“Before we only did on-site workshops,” she explained. “But we had really low attendance, since in rural areas it can be difficult to go from one place to another. Through the e-learning course and other initiatives, we were ultimately able to reduce promotion and capacity building costs by 80 per cent.”
For Thembisa Mapukata, Executive Head of the Foundation Market at Old Mutual, South Africa, the automation of key administrative processes contributed not just to lower expenses but also to better client servicing in the form of reduced enrolment time from 7 to 3 days and faster claims settlement from 17 to 5 days.
Technology in staff training, claims processing and fraud control were common themes among the presentations as was organizational structure. Organizational structure, defining roles and responsibilities between insurance companies and their vendors, was also discussed.
 ILO Photo / J. Suministrado |
Housed at the International Labour Organization's Social Finance Programme, the Microinsurance Innovation Facility seeks to increase the availability of quality insurance for the developing world's low-income families to help them guard against risk and overcome poverty.