About us

The Microinsurance Innovation Facility was established in 2008 to support the extension of insurance to millions of low-income people in the developing world, with the overall aim of reducing their vulnerability to risk.

Our objectives

The primary objective of the Facility is to increase the availability of better insurance products for a greater number of low-income households.

• to what extent insurance products can help low-income people to manage risk
• what insurance products are appropriate and how to provide them
• how to develop an insurance culture among the poor

These objectives involve engaging in activities aimed at stimulating the market for microinsurance among low-income people – activities that support the development of insurance products, the emergence of institutional models and partnerships, and the education of potential consumers on the utility and value of insurance.

Our partners

The Facility works to benefit low-income people in developing countries - who are most vulnerable to risk and least able to cope with crises - by collaborating with:

• Risk carriers such as insurance companies, semi-formal microinsurers and federations of microinsurance schemes
• Delivery channels such as NGOs, cooperatives, labour unions, employer associations, banks, insurance brokers and health care providers
• Insurance industry actors such as claim processors, technical assistance providers, training institutions, insurance associations, IT providers and database management services
• Researchers working in institutes, networks, universities and local resource centres

We are particularly interested in collaborating with institutions, both for-profit and non-profit, in Africa, Asia and the Pacific, Latin America and the Caribbean, and the Middle East.

What is microinsurance?

Microinsurance is a mechanism to protect poor people against risk (accident, illness, death in the family, natural disasters, etc.) in exchange for insurance premium payments tailored to their needs, income and level of risk. It is aimed primarily at the developing world’s low-income workers, especially those in the informal economy who tend to be underserved by mainstream commercial and social insurance schemes.

The challenges

The challenges in increasing insurance cover among low-income people in developing countries lie in three main areas – products, models and education.

Products: The concept of ‘product’ covers not only price, benefits and terms, but also product management and delivery processes. In microinsurance, the challenges include accurately setting price and benefits, coping with huge volumes of small policies, collecting premiums from people without bank accounts, verifying and paying small claims, and controlling fraud, adverse selection and moral hazard.

Models: New models and partnerships are needed to capitalise on the strengths and overcome the weaknesses of current institutional models for providing microinsurance. The challenge is to devise institutional solutions that are efficient, provide relevant and affordable coverage, and balance the interests of risk carriers, delivery channels and policy holders.

Consumers Education: The poor tend to have short-term planning horizons, to be suspicious of insurers’ motives and to believe that insurance is only for the rich. They often do not understand how insurance works or how it compares with other risk-management tools such as savings and credit. The challenge is to make insurance more accessible to them not just physically and economically, but also intellectually – that is, to develop an insurance culture among the poor.