This how-to manual guides managers of microfinance institutions (MFIs) through the complexities of offering basic insurance products, either on their own or in partnership with an insurance company. Insurance is one solution to help low-income households and microfinance institutions to manage risks, but it is not the only solution and it is not always the best solution. This manual helps determine whether it is appropriate to offer insurance, which type of insurance product(s) to offer, and through what institutional structure.
This practical guide:
- covers the fundamentals of the insurance business, including benefit design, insurance terms, pricing and controls
- presents the design of five basic, short-term, credit-linked insurance policies, both mandatory and voluntary
- discusses outsourcing arrangements with formal insurance companies or skilled consultants
- looks at the financial management and operational integration of an insurance business into a microfinance institution
- contains a useful glossary and a list of suggested reading
This manual will help MFI managers understand the fundamentals of providing insurance to low-income groups, and help them assess whether or not their institution is ready to provide insurance. If they are ready, the manual will help them decide whether to do so on their own or in partnership with insurer or skilled consultants. If the is decision is to go it alone, the manual guides management through the creation of a series of basic life and disability products, products chosen because of their simplicity, relative to other more complex insurance products like property and health insurance. If, after going through the assessment exercise, the MFI decides it is not ready to go it alone, the text provides a range of options which allow the MFI to sell insurance in partnership with an insurer.
The manual guides the reader on the process of negotiating and managing a relationship with an insurer. Unlike most other insurance texts, experts in both microfinance and insurance wrote this manual and the information is presented through the lens of a microfinance institution.