Protecta Compañía de Seguros

Grantee

Protecta Compañía de Seguros S.A. (Protecta Insurance Company), one of the first insurance companies in Peru to enter the insurance market with the purpose of serving small scale entrepreneurs and low-income families, started its activities in January 2008. The ACP Group is Protecta's main shareholder and is also the main shareholder of Mibanco, Peru's leading specialized microfinance bank. Protecta's main product lines include: credit life insurance and life insurance for the spouses of microentrepreneurs.

Protecta attracted the interest of the International Financial Corporation (IFC), affiliated with the World Bank, and in December 2008 the IFC became a shareholder of Protecta with 16.5% of the shares.

With more than half a million lives covered already, the company aims to transform the insurance market in Peru and become a microinsurance leader in Latin America, just as MiBanco has achieved in the microfinance sector.

Project Summary

• Project name: Seguro Mi Familia Municipal
• Project start date: September 2009
• Duration: 3 years
• Country: Peru

Beneficiaries

The beneficiaries are low-income people who own their homes, either totally or partially. As homeowners they are tax payers to the local municipality. The target population is made up of self-employed families, most of them microentrepreneurs, who are excluded from a number of services: health and home insurance, access to pension schemes and access to insurance in general. Clients have been excluded from these services in part because they do not have legal documentation that legitimates their property ownership and they work in the informal economy with irregular incomes. The objective in implementing this insurance model is to satisfy the need for social protection for approximately 280,000 persons.

Project Description

The project Seguro Mi Familia Municipal seeks to implement a model that will be able to respond to one of the most sensitive risks facing the low-income population. The insurer will provide access to low priced life insurance, which will temporarily substitute lost income in the event of death of the primary breadwinner and cover the most urgent related expenses.

The project is based on an analysis of the daily lives of the target population. The product will be distributed by municipalities that are interested in improving the quality of life of low-income people and that already have developed a trust relationship with these communities.

The project also includes providing managerial and operational support, both with processes and technological issues, to the municipalities who will work as the agents. This will allow them to offer insurance products that shall become financially sustainable. This support will be of particular importance when these institutions are not familiar with microinsurance and its associated processes. Finally, the project hopes to develop, through the municipalities, a culture of insurance among low-income people.

Key Challenges

• Difficulty of expanding the program into other local areas, due to potential lack of interest in this type of service.
• Potentially limited value attributed to insurance within target population, compared with other types of services offered by the local government, due to the intangibility of the concept of insurance.
• Achieving an effective and efficient working relationship between the distribution channel and provider of operating services (the municipality) and the insurance company.

Learning Agenda

At the completion of the project Seguro Mi Familia Municipal, we will be able to collect information relevant to the following questions:

• Can local governments be an active agent in the distribution of insurance?
• Will the Protecta card be valued as a benefit by the population so as to enable a sustainable insurance product and maintain take up rates?
• Can "insurance with a social mission" be a mechanism for spreading an insurance culture?
• Will the clients of the sector gain a better understanding and knowledge of this type of insurance?
• Is it viable for insurance companies to offer "insurance with a social mission" over the long term to the least advantaged sectors?
• How do the populations of low-income districts perceive microinsurance? What is their perception of insurance companies?
• Will the local government be able to offer good customer service, making use of the processes and tools of the insurance company designed for this end, and therefore satisfy the expectations of the population?

More information on the project

• Protecta Compañía de Seguros