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Microinsurance Papers
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Savings in microinsurance: Lessons from India -
(pdf 480 KB)
Rob Rusconi, Microinsurance Paper n°14, ILO, 2012
This paper assesses four products offered by Indian insurers that combine the benefits of insurance and saving. Combining these two financial instruments makes sense when considering the complex financial lives of low income households. Designing such products is not straightforward, however, as insurers face many trade offs. The paper presents a framework that can be used to analyse the design of savings linked insurance products. The analysis of the characteristics of the four products reviewed in the paper highlights the different approaches taken by the insurers, and provides preliminary insights for others interested in designing similar products.
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Third Party Payment Mechanism in Health Microinsurance -
(pdf 1,49 MB)
Pascale Le Roy and Jeanna Holtz, Microinsurance Paper n°13, ILO, 2011
Some health microinsurance (HMI) schemes require that patients pay cash at the time of receiving health care services, and then seek
reimbursement from the insurer at a later date. For low-income households, this can be a severe financial barrier. One common way to
alleviate this barrier is to set up a third-party payment (TPP) mechanism with selected health care providers. A TPP mechanism is a
model for claims payment in which insured patients are not required to pay the entire cost of health services covered by the HMI scheme at the
time the services are rendered. This paper draws on the experience of various health microinsurance schemes and presents the pros and cons of
using a TPP mechanism. It also presents key issues to address when establishing and managing a TPP mechanisms, as well as tips and
solutions collected from case studies and experts` interviews.
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Improving client value from microinsurance: Insights from India, Kenya and the Philippines - (pdf 969 KB)
Michal Matul, Clemence Tatin-Jaleran and Eamon Kelly, Microinsurance Paper n°12, ILO, 2011
Are clients benefiting from microinsurance? How do we measure those benefits? How do we improve the value proposition for the clients? This paper contributes to this discussion by focusing on improving client value rather than proving it. It presents results from the analysis of 15 microinsurance schemes in Kenya, India and the Philippines using the ILO's client value assessment tool called PACE (Product, Access, Cost and Experience). The PACE tool looks at the added value for clients from insurance products by comparing them to each other and to alternative means of offering protection from similar risks. The results show that there is a place for microinsurance to add value on the top of informal risk-sharing practices and existing social security schemes to protect low-income populations against life and health risks. The paper presents also a menu of interventions that can further improve client value from microinsurance.
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A business case for microinsurance: an analysis of the profitability of microinsurance for five insurance companies - (pdf 750 KB)
Janice Angove and Nashelo (Quindiem Consulting), Microinsurance Paper n°11, ILO, 2011
Is there a business case for microinsurance? Under what circumstances can insurance companies generate profits from microinsurance? These are important questions because insurers are increasingly interested to expand into the low-income market. To encourage this expansion, microinsurance initiatives need to demonstrate that they are commercially viable and sustainable over time. This note assesses the business case for microinsurance through case studies of five microinsurance initiatives.
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Funeral insurance -
(pdf 490 KB)
Christine Hougaard and Doubell Chamberlain (Center for Financial Regulation and Inclusion), Microinsurance Paper n°10, ILO, 2011
Funeral insurance is essentially a term life insurance policy where the benefit is used towards funeral expenses. The benefit can be in the form of a funeral service, a cash benefit that could be used towards a funeral, or a combination of the two. Outside of credit life insurance, funeral insurance is the most prevalent form of microinsurance in a number of countries. Insurers are starting to improve client value by adding elements that go beyond pure funeral insurance.
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Improving credit life microinsurance -
(pdf 654 KB)
John Wipf, Eamon Kelly and Michael J. McCord, Microinsurance Paper n°9, ILO, 2011
Credit life cover - insurance that covers the outstanding principal and interest of a loan on the death of a borrower - is the logical starting point for organizations new to microinsurance. It is easy to introduce, simple for borrowers to understand, and seen by financial intermediaries as a support to their core business. Credit life can help create an understanding of microinsurance and expand demand by building an insurance culture. Unfortunately, credit life insurance is often designed poorly, providing little value to clients, and reinforcing a common negative attitude toward insurance. Thus, improving the value of credit life products may improve clients’ attitudes towards insurance, and in turn enhance demand. This paper reviews the structure of credit life products and benefits for borrowers, lenders and insurers. It measures the client value provided by a set of surveyed products, and proposes ways to expand products to provide greater value. The paper also investigates the operational issues that should be considered when providing expanded benefits.
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Beyond sales: new frontiers in microinsurance distribution -
(pdf 938 KB)
Anja Smith, Herman Smit and Doubell Chamberlain (Centre for Financial Regulation and Inclusion), Microinsurance Paper n°8, ILO, 2011
Achieving scale through cost-effective distribution is one of the biggest challenges facing insurers in low-premium environments. In an effort to effectively reach a large client base, the emphasis is increasingly falling on innovative new distribution models as alternatives to traditional microinsurance distribution approaches, which typically rely on distribution through microfinance institutions (MFIs).
The note considers the experiences of a group of leading microinsurance innovators and, in particular, the role that new distribution approaches has played. It takes stock of what innovation in microinsurance distribution means and considers the performance of fourteen new microinsurance business models in South Africa, Colombia, Brazil and India in the distribution context. It also provides a summary of the cross-cutting issues and trends emerging across the different distribution models.
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Formalizing the Informal Insurance Inherent in Migration -
(pdf 705 KB)
Jennifer Powers, Barbara Magnoni and Emily Zimmerman, Microinsurance Paper n°7, ILO, 2011
In our increasingly global economy, labor continues to be a major export commodity for many developing countries. Migration can help families mitigate their risks by increasing overall income levels and diversifying income sources. Yet, many migrants tend to find themselves in positions of vulnerability in their host countries without any access to social safety nets. Emergencies can, thus, quickly erode any savings or assets that the migrant has. Migrant-linked insurance products can help transnational families manage their risks and protect their assets. The note explores the existing and potential links between migration, remittances and insurance. It provides a mapping of migration-linked microinsurance products, a framework for how to think about them, and an outline of the opportunities and challenges for microinsurers interested in developing products for this market segment.
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Innovations and Barriers in Health Microinsurance -
(pdf 588 KB)
Sheila Leatherman, Lisa Jones Christensen and Jeanna Holtz, Microinsurance Paper nº6, ILO, 2010
The emergence of health microinsurance (HMI) programmes worldwide provides hope that the poor will receive, at a minimum, a reliable, adequate level of access to affordable healthcare. Led by the University of North Carolina - Chapel Hill and the ILO's Microinsurance Innovation Facility, this study includes a literature review of 68 documents covering the period from 1999 to 2010 and expert interviews with more than 31 experts representing 25 organizations. It focuses on private sector HMI and discusses the challenges that limit the growth and impact of HMI. In addition to identifying barriers to success, the authors present innovations that may move the field forward, including collaboration with public programmes.
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The Psychology of Microinsurance: Small Changes Can Make a Surprising Difference -
(pdf 374 KB)
Aparna Dalal and Jonathan Morduch, Microinsurance Paper nº5, ILO, 2010
One important lesson from behavioural economics is the understanding that small changes in the design of products and marketing can sometimes make a surprising difference in how and whether financial products are used. Led by the Financial Access Initiative, this research presents laboratory and field research examples from the field of behavioural economics to provide eight recommendations for microinsurance providers. The authors describe new insights into how households think about losses and gains, weigh present and future tradeoffs, struggle with self-control, and are influenced by the way choices are framed. These insights can help insurers navigate how to improve product design, marketing, insurance education, pricing, and take-up.
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The Landscape of Microinsurance in Africa -
(pdf 1,66 MB)
Michal Matul, Michael J. McCord, Caroline Phily and Job Harms, Microinsurance Paper nº4, ILO, 2010
In 2009, the Microinsurance Innovation Facility published, in its Briefing Notes series, the results of a study that revealed
the current landscape of microinsurance in Africa. The study, conducted in partnership with the MicroInsurance Centre, identified
over 14 million low-income people in Africa who were covered by microinsurance at the end of 2008, almost double where this figure
stood in 2004. Even with such growth, substantial parts of the continent remain almost barren of microinsurance.
This paper is an expanded version of those briefing notes, presenting more detailed results of the study and setting them in context.
Market opportunity and demand are covered in depth, along with the African regulatory environment and other important enabling factors.
The current outreach of microinsurance in Africa, including insurers, products, and delivery channels, is then presented from a practice-based
perspective, with case studies and input from expert practitioners. The paper concludes with a discussion of challenges that must be
overcome in order to facilitate broader, high-quality expansion in the years to come.
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Microinsurance that works for women:
Making gender-sensitive microinsurance programs -
(pdf 619 KB)
Anjali Banthia, Susan Johnson, Michael J. McCord, Brandon Mathews, Microinsurance Paper nº3, ILO, 2009
Led by the Women's World Banking and the
Zurich Insurance Company,
this research is intended to generate discussion of a
gendered approach to microinsurance. While insurance companies are beginning to design and deliver a variety of products
to the poor, the paper focuses primarily on health and life insurance because these two risks typically are reported to
exert significant financial pressure on poor women. The authors explore how health and life microinsurance could be designed
to more effectively respond to women's needs, and offer practical advice to insurance companies for delivering such
schemes. They conclude with a call to action for insurance companies, delivery channels, researchers and donors to
make insurance more gender-sensitive, which will serve the dual mission of poverty alleviation and profitability.
See also the briefing notes -
(pdf 641 KB) that summarizes the paper.
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Technology for microinsurance scoping study -
(pdf 957 KB)
Eric Gerelle and Michiel Berende, Microinsurance paper nº2, ILO, 2008
This study was part of the effort by the CGAP Working Group on Microinsurance (WGMI) and the Microinsurance Innovation
Facility to compile an inventory of information technologies that are or could be applicable in the extension of insurance
services to low-income households. The objective of this study was to catalogue and illustrate existing technologies
applicable to microinsurance.
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Literature review on microinsurance -
(pdf 525 KB)
Stefan Dercon and Martina Kirchberger in collaboration with Jan Willem Gunning and Jean-Philippe Platteau,
Microinsurance paper nº1, ILO, 2008
This paper provides a selective overview of the current state of research on microinsurance. Its key purpose is to identify
knowledge gaps, that deserve further investigation. The review is structured along three core issues: the need for careful
evaluation of the impact of microinsurance on the poor, the need to increase our understanding of the nature of the demand for
microinsurance, including dimensions related to trust and the understanding of insurance by the poor, and finally, the need
for further research on supply dimensions, focusing on the key challenges and bottlenecks for widespread and sustainable
provision of microinsurance. For each of these core issues, a brief review of the literature is offered, as well as the
questions that could guide further work, informing the research agenda of the Microinsurance Innovation Facility.
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