The success of any insurance product is based on multiple factors such as product features, other market providers, and environmental influences. Microinsurance products are no different. Some of these factors may not be under the microinsurance provider’s control, but there are key steps providers can take to enhance their potential for success. The most successful microinsurance products are SUAVE (Simple, Understood, Accessible, Valuable,
and Efficient).

This second volume of Protecting the poor is a unique collection of recent practices and emerging ideas in microinsurance. It covers numerous innovations that have emerged in recent years to meet the challenges of providing insurance to low-income people, from new products and deliverychannels to consumer education tools, while examining changes in regulations, providers andschemes. As the microinsurance community dramatically evolves and millions more low-income households have access to better insurance cover, this timely second volume will be an invaluable resource for policymakers, insurers, academics and NGOs.

This Note analyses the possible impact of these regulatory and political changes on the microinsurance sector, and predicts the state of the sector in Uganda in near future. Our predictions are based on the assumption that the IRA will be a strong regulator and national policies will be sincerely and effectively implemented.

Con un énfasis cada vez mayor en el valor de los microseguros para el cliente y la necesidad de examinar los productos desde la perspectiva del cliente, esta edición de primavera de la Trilogía de Microseguros se concentra en el desempeño social de los microseguros. El primer artículo examina el desempeño social desde un punto de vista más general, detallando algunas de las iniciativas que están en curso. A esto le sigue un artículo que se focaliza en el testeo de los indicadores de desempeño social, identificado por el Grupo de trabajo de Desempeño del Microinsurance Network.

Etant donné l’importance croissante accordée à la valeur ajoutée de la micro-assurance pour le client et la nécessité d’examiner les produits depuis la perspective du client, ce numéro de printemps de la Trilogie Micro-Assurance est consacré à la performance sociale en micro-assurance. Le premier article propose un aperçu général de la performance sociale et décrit ensuite plusieurs initiatives en cours. Il est suivi par un article consacré au test des indicateurs de performance sociale identifiés par le Groupe de travail sur la Performance du Microinsurance Network.

In early 2004, a community-based health insurance (CBI) scheme, Assurance Maladie à Base Communautiare (AMBC), was introduced in Nouna district, Burkina Faso. CBI is a common term used for voluntary, not-for-profit health insurance schemes, organized at the level of the community [1, 2]. Under CBI schemes, members of a community, often defined by geographical proximity or through employmentbased relationships, pool resources in order to provide
support for covering health expenditures [3]. CBI has been seen as an attractive solution to the challenge of generating financial resources for healthcare in developing countries, because they are designed to assist the many people in those countries who work in rural and informal sectors and thus rarely have access to other types of health insurance, which are based on
formal, taxed income [2, 4-8]. The development of CBI programs in sub-Saharan Africa has garnered substantial interest by both researchers and
policymakers alike, as an instrument to reduce financial barriers to care where other types of health insurance schemes cannot be implemented [7, 9-17].
Two important challenges in establishing and sustaining CBI schemes are low rates of community member enrollment and high dropout rates, which
lead to low CBI coverage. Low CBI coverage in turn results in low levels of revenue and limited risk-pooling, which can leave CBI schemes financially and
organizationally vulnerable to unexpected changes in incomes or disease incidence.

In a nation that has been deeply impacted by a lingering financial crisis — where home prices have plummeted and job gains have yet to take hold — the long-held view of realizing a prosperous American Dream is no longer a monolithic, singular concept. In its place, a new American Dreams is emerging, one that focuses more on achieving personal fulfillment over financial success.

The 2011 MetLife Study of the American Dream reflects an uncertain era where Americans no longer seek to become wealthy; rather, they want to achieve a sense of financial security that allows them to live a sustainable lifestyle.

This has led to new thinking about what the American Dream means, and to a portrayal of Americans as resilient and adaptive. And while achieving the Dream remains important — particularly to younger Americans — how it is achieved has changed.

This briefing note presents a framework that can be used to analyse the design of savings-linked insurance products. It uses the framework to assess a new wave of products targeted at the low-income market in India and presents lessons and trade-offs that insurers must consider when designing these products.

La edición de invierno de la Trilogía de Microseguros se centra en los microseguros en Brasil. No es simplemente el hecho de que allí se llevó a cabo la 7a. Conferencia Internacional sobre Microseguros en Noviembre de 2011, sino que un número de documentos y estudios de caso han sido publicados recientemente sobre el mercado de microseguros brasilero y sobre los pasos que se están siguiendo para facilitar la oferta de productos de seguros a personas de bajos ingresos.

El boletín comienza con un artículo sobre la conferencia antes de examinar el mercado de microseguros brasilero al extractar los aspectos más importantes de un informe estratégico, y luego se focaliza en un estudio de caso que ilustra uno de los muchos modelos innovadores y alternativos de distribución de microseguros en Brasil.

Ce numéro hivernal de la Trilogie de la Micro-Assurance est en grande partie consacré à la micro-assurance au Brésil. Le pays a non seulement accueilli la 7ème Conférence internationale sur la micro-assurance mais il a également été récemment le sujet de plusieurs études et publications consacrées au marché brésilien de la micro-assurance et aux mesures prises pour faciliter l’offre de produits d’assurance aux personnes à faible revenu.

Ce bulletin d’information commence par un article sur la conférence et aborde ensuite les spécificités du marché brésilien de la micro-assurance, en utilisant pour ce faire les principales conclusions d’un rapport stratégique. Enfin, ce numéro se concentre également sur une étude de cas illustrant un des nombreux modèles innovants et alternatifs de micro-assurance au Brésil.

The winter edition of the Microinsurance Trilogy focuses on microinsurance in Brazil. Not only was the 7th International Microinsurance Conference held there in November 2011, but a number of papers and case studies have recently been published focusing on the Brazilian microinsurance market and the steps that are being taken to facilitate the offering of insurance products to low-income people.
The newsletter begins with an article on the conference before examining the Brazilian microinsurance market by extracting the key findings from a strategic report. It then continues by focusing on a case study that illustrates one of the many innovative and alternative microinsurance distribution models in Brazil.

This is the third in a series of State of Knowledge Reports (SKRs), produced by GlobalAgRisk, regarding various aspects of weather index insurance. The first SKR focused on data challenges that face many weather index insurance products and how those data challenges vary for different types of products and different target markets. The Data SKR also assessed the status of emerging data technologies and scientific advances that may one day reduce the need for significant investments in weather station infrastructure. Weather stations are sparse and difficult to maintain in many lower income countries. The second SKR focused on legal issues associated with weather index insurance.

This SKR focuses on developing markets for weather index insurance. Three general recommendations emerge from this SKR and the preceding reports in this series.

1. From the outset, projects supporting index insurance must formulate evaluation strategies related to targeted development objectives. When derived from a clearly defined causal theory of change, these strategies can aid investment and expansion decisions.
2. Rather than providing premium subsidies, donor and government funds should be used to invest in building local capacity and establishing the proper institutional frameworks that can support the development and growth of index insurance markets in lower income countries.
3. To address challenges in the market development process, product design should focus on: a. Starting with products for risk aggregators; b. Insuring against the broader economic consequences of weather risk, not just direct losses; c. Insuring against low‐frequency, catastrophic risks; and d. Reducing costs and adding value through innovative design and delivery features.

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.

This is the Access to Insurance Initiative's first "Inside" publication, which introduces the Initiative and presents its goal, aspirations and activities to partners and all interested parties. The "Inside" also provides details on the Initiative's four key activity areas: 1. Building knowledge and learning; 2. Undertaking country projects; 3. Contributing to IAIS standard-setting and 4. Advocacy and engagement in international platforms. "Inside" further explains how the Initiative works and its plans for the future. The Initiative is entering the next phase of its life. Work in the four activity areas is expanding and the search for partners and funding is on-going. In future, the Initiative will continue to hold dialogue events and training seminars. As evidence of the impact of policy and regulatory changes on market development becomes available, it will share these lessons with supervisors and others. Increasing focus will be placed on consumer protection, index-based insurance and health insurance. Also, the Initiative plans to develop innovative training programmes. It will continue to carry out country diagnostic studies and implementation support, expanding geographic reach (for example to cover the Pacific, the Caribbean, Middle East and North Africa and Central Asia regions) and to gain momentum in implementation support. As it takes time to implement a reform agenda, the Initiative takes a multi-year view of country-level implementation support. The Initiative will continue to work with the IAIS as its strategic partner. It will also strengthen and expand other partnerships that advocate financial inclusion and share a financial inclusion agenda. Though a relatively new organisation, the Initiative is excited to play a role in promoting policy and regulatory change and sound supervisory systems in emerging insurance markets.

This report was commissioned by Funenseg and CNSeg, the Brazilian insurance school and insurance industry association respectively, as an independent assessment of the microinsurance market in Brazil, the drivers of its development and how this development has been shaped by regulation. It proposes a strategy for the further development of the microinsurance market, with specific focus on regulatory strategy and design.

A number of dedicated focus group discussions held in Rio de Janeiro, São Paulo and Fortaleza (for which a separate report is available) were conducted as part of the research, as well as an analysis of available IBGE socio-economic and fi nancial services usage data subcontracted to Rio de Janeiro-based firm IETS. The Brazilian private insurance supervisor, SUSEP, kindly made their database available for dedicated analysis that identified trends in product lines especially relevant to microinsurance.

Over the last ten years there has been a renewed interest in providing agricultural insurance in developing countries. However, voluntary demand for unsubsidised insurance products has been low, particularly from the poorest farmers.

Chapter One presents a model of rational demand for hedging products, where there is a risk of contractual nonperformance. Demand is characterised and bounded for risk averse and decreasing absolute risk averse decision makers. For constant absolute and relative risk averse utility functions, demand is hump-shaped in the degree of risk aversion when the price is actuarially unfair, first increasing then decreasing, and either decreasing or decreasing-increasing-decreasing in risk aversion when the price is actuarially favourable. The apparently low level of demand for consumer hedging instruments, particularly from the most risk averse, is explained as a rational response to deadweight costs and the risk of contractual nonperformance. A numerical example is presented which suggests that some of the unsubsidised weather derivatives currently being designed for and marketed to poor farmers may in fact be poor products.

Chapter Two presents experimental evidence collected from a framed microinsurance lab experiment using poor subjects in rural Ethiopia. In line with the theoretical model of Chapter One, demand for actuarially unfair index insurance is hump-shaped in wealth, first increasing then decreasing. In contrast with recent field experiments where it is not possible to demonstrate that low demand for indexed insurance is ‘too low’, use of a laboratory experiment with an objectively known joint probability distribution allows normative statements to be made about the observed level of demand. The observed level of demand for index insurance in the experiment is higher than the decreasing absolute risk averse upper bound of Chapter One, suggesting that subjects bought ‘too much’ index insurance.

Chapter Three presents a vision of insurance design for the poor. Technically optimal arrangements involve insurance providers, such as microinsurers or governments, acting as reinsurer to groups of individuals who have access to cheap information about each other, such as extended families or members of close-knit communities, who in turn offer mutual insurance to each other.

As a consequence of climate change, agriculture in many parts of the world has become a riskier business activity. Given the dependence on agriculture in developing countries, this increased risk has a potentially dramatic effect on the lives of people throughout the developing world especially as it relates to their financial inclusion and sustainable access to capital. This study analyzes the relationships between rainfall per crop gestation period (planting – harvesting) and crop yields and study the likelihood of crop yield losses. We make recommendations on how this information could be used to develop a trigger for index insurance to help mitigate the financial risks to farmers and lenders who make loans to farmers in Ghana. The focus of this paper is on rainfall and crop yield and explores the potential for a drought loss insurance index trigger. This study concludes by describing limitations and challenges that must be overcome in order to develop such risk management tools and by describing the potential for crop loss index insurance based on area crop yield in northern Ghana.

Esta edición de la Trilogía de Microseguros presenta dos iniciativas focalizadas en distintas áreas de la gestión del conocimiento: El Fondo para la Innovación en Microseguros de la OIT y el proyecto MILK (Conocimiento y Aprendizaje de Microseguros), ambas iniciativas financiadas por la Fundación de Bill y Melinda Gates.

Mientras que el Fondo para la Innovación en Microseguros enfoca el tema del conocimiento a través de las lecciones aprendidas de sus becarios y de sus actividades de investigación, el proyecto MILK lo enfoca a través de estudios en profundidad de modelos de negocios relacionados con los microseguros, con participantes clave de toda la cadena de valor, y a través de la investigación con clientes que buscan el valor agregado de los seguros sobre otras opciones de gestión de riesgo. Estos dos enfoques diferentes pero complementarios a la vez sobre la generación del conocimiento, brindarán una comprensión más clara respecto al tema de los microseguros.

Ce numéro de Trilogie de la Micro-Assurance présente deux initiatives mettant l’accent sur les divers aspects de la gestion des connaissances: le Fonds pour l’Innovation en Micro-Assurance du BIT et le projet MILK (Microinsurance Learning and Knowledge) du MicroInsurance Centre, tous deux sont financés par la Fondation Bill & Melinda Gates.

Tandis que le Fonds aborde la question de la connaissance par le biais de ses activités de recherche et des conclusions des chercheurs boursiers, le projet MILK base son approche sur des études de cas approfondies des pratiques de micro-assurance relevées parmi les acteurs clés de la chaîne de valeur, ainsi que sur des recherches menées auprès des clients sur la valeur ajoutée de la micro-assurance  par rapport à d’autres systèmes de gestion du risque. Ces deux approches différentes mais complémentaires sur la création des connaissances contribuent toutes deux à une meilleure compréhension de la micro-assurance.

This edition of the Microinsurance Trilogy presents two initiatives that focus on the various aspects of knowledge management: ILO’s Microinsurance Innovation Facility and the Microinsurance Learning and Knowledge (MILK) project implemented by the MicroInsurance Centre, both initiatives are funded by the Bill & Melinda Gates Foundation.

While the Facility is addressing the knowledge issue through lessons learnt from their grantees and its research activities, the MILK project is addressing them through in-depth studies of the business cases of key players throughout the value chain, and through research with clients looking at the value added of insurance over other risk management options. These two different yet complementary approaches of creating knowledge will provide a comprehensive understanding of microinsurance.