For more information about microinsurance, check out the ILO's Emerging Insights, which provide bite-sized lessons from microinsurance practitioners about various themes including distribution, client value, product design and others. Be sure to check out the latest edition of the ILO's Emerging Insights at the link above featuring one of our latest MILK project papers and also Barbara Magnoni and EA Consultants!
|Author:||Russell Leith and Ramanathan Subramanian|
In the Pacific, insurance penetration is extremely low and generally only held by large
companies and wealthy individuals. The largest proportion of the population; those who are most
vulnerable to shocks and who suffer the most if they occur, do not have access to any insurance
products – at least not yet.
If we are to overcome poverty, we will need to strengthen the ability of the most vulnerable to stand
on their own feet; to take charge of their own destiny. This is what will make or break a success in
development. Sustainable and real results can only be achieved when people themselves are put in a
position where they can take charge of their own development process. This illustrates the need for
insurance within the overall development scenario.
As donors, it is important we create opportunities and choices for people. This is where insurance
plays a key role. Insurance allows individuals and families to continue to have choices and
opportunities in life also when unexpected events happen. It acts as a safety net for families, which
in times of a crisis provides them with the much-needed funds to re-establish their lives and
livelihoods. Therefore, to achieve sustainable development it is critical to expand the access to
insurance to the large segment of uninsured population.
|Author:||Russell Leith and Ramanathan Subramanian|
In the Pacific, insurance penetration is extremely low and generally only held by large companies and wealthy individuals. The largest proportion of the population; those who are most vulnerable to shocks and who suffer the most if they occur, do not have access to any insurance products – at least not yet.
If we are to overcome poverty, we will need to strengthen the ability of the most vulnerable to stand on their own feet; to take charge of their own destiny. This is what will make or break a success in development. Sustainable and real results can only be achieved when people themselves are put in a position where they can take charge of their own development process. This illustrates the need for
insurance within the overall development scenario.
As donors, it is important we create opportunities and choices for people. This is where insurance plays a key role. Insurance allows individuals and families to continue to have choices and opportunities in life also when unexpected events happen. It acts as a safety net for families, which in times of a crisis provides them with the much-needed funds to re-establish their lives and llivelihoods. Therefore, to achieve sustainable development it is critical to expand the access to insurance to the large segment of uninsured population.
According to new research released by the Munich Re Foundationand GIZ,the microinsurance sector in Asia and Oceania has reached 172millionlives and properties covered, representinga40% annual growth rate between 2010 and 2012.India is leading the market at over 100 million, whilstMalaysiaandIndonesiaemerge as having the most vibrant microinsurance markets with agrowth rate of 185% and over 100% respectively,over the same time period.1
This briefing note summmarizes preliminary finding of the "The Landscape in Microinsurance in Aisia and Oceania" study to be discusses during the 9th International Microinsurance Conference.
The Study complements " The lanscape of Microinsurance in Africa, Latin America and the Caribbean" published in 2012 and completes the "World Map of Microinsurance."
Results amd data are subject to clarification and discussion over the coming months. The final report is expected to be published by May 2014.
|Author:||Meredith Kimball, Caroline Phily, Amanda Folsom,|
This paper reviews country experiences in Cambodia, Ghana, India, Kenya, Thailand, Tanzania and the Philippines. It examines the hypothesis that government-sponsored insurance initiatives should collaborate with private actors to accelerate the expansion of health insurance to informal workers and their families.
|Author:||Michael J. McCord, Molly Ingram and Clémence Tatin-Jaleran|
The microinsurance sector in Latin America and the Caribbean (LAC) has recently experienced tremendous growth in life and accident coverage as well as a notable increase in products covering multiple risks. Despite some significant initiatives, primary health and property microinsurance coverage remains extremely limited. In the eleven countries for which previous data was available, the total number of people and properties identified as covered by microinsurance grew by 125% over the six years from 2005 through the end of 2011. Within the region, the five largest microinsurance markets - Mexico, Brazil, Colombia, Peru, and Ecuador - remain dominant, as these countries account for 90% of all microinsurance coverage in LAC.
|Author:||Daniel Clarke and Liam Wren-Lewis|
This paper considers the potential role of government in aiding the scale-up of high quality index insurance products in developing countries. In particular, we analyse optimal public policy in light of the fact that index insurance policies are typically credence goods - that is, the basis risk of a given policy cannot be distinguished by consumers before purchase and only to a limited extent after purchase. We discuss two potential market failures that stem from this property that governments may seek to correct: low takeup and low investment in reducing basis risk. In each case, we consider the costs and benefits of various alternative government policies. We show that policies aimed to improve take-up may improve or worsen incentives for investment, and that the precise nature of these effects will depend on the government’s ability to commit, the marginal cost of funds, and their potential to identify the inputs necessary for constructing a high quality index.
|Author:||Laura Budzyna, Taara Chandani and Barbara Magnoni|
In this MILK brief, the MicroInsurance Centre’s MILK Project Client Math team partnered with Hygeia Community Health Care (a collaborative effort among the PharmAccess Foundation, the Health Insurance Fund, and the Nigerian HMO and hospital network, Hygeia Nigeria Limited) to analyze the value of its product for clients with chronic disease, specifically hypertension. HCHC seeks to facilitate better health outcomes for low-income families in Lagos by reducing health care costs and improving the quality of care.
We found that HCHC clients use preventative hypertension services more frequently and consistently than uninsured respondents and have made more lifestyle changes than the uninsured comparison group, suggesting that the insurance has reduced barriers to access and played a role in facilitating healthy behavior change. To compound this benefit, HCHC clients also face dramatically lower costs of treatment and services, though their opportunity cost of seeking care remains the same as it does for uninsured clients. At the same time, we find that the lifestyle changes that insured clients have undertaken, specifically dietary changes, have resulted in new and unforeseen non-medical costs for this group. This sheds light on the consideration that in some cases, by virtue of their more frequent contact with the health system, insured individuals actually spend more on their health than do uninsured individuals.These expenses are important to quantify as they can lead to improved health outcomes but can also discourage short-term usage of health services.
|Author:||Taara Chandani and Denis Garand|
The Health Working Group of the Microinsurance Network is excited to announce the release of a guide for practitioners in health microinsurance: “Lessons Learned and good practices in health microinsurance”. This guide aims to support implementers in designing and administering client centred and viable microinsurance schemes. The publication takes stock of the learning in health microinsurance to date, and offers practical advice on how to go about their implementation. It also includes a list of open ended, unanswered questions to help foster future thinking and innovation in the field, acting as a catalyst for further improvement and development of the sector.
Written by Taara Chandani and Denis Garand, the guide focusses on four areas of key importance for the delivery of sound health insurance: Reaching poor households, ensuring value to clients by expanding product benefits, ensuring value to clients by delivering high quality medical services, and achieving institutional sustainability. The MicroInsurance Centre is proud of this latest accomplishment for Taara and Denis and honored to say that both of them have made in the past, and continue to make, integral contributions to many MicroInsurance Centre projects.
The following is a report on two case studies concerning distribution and technology in microinsurance. The case studies address the experiences of Bradesco in Brazil and CARE in India.
The distribution channels described include sale of microinsurance policies through commercial retailers, as well as through non-commercial channels such as primary health care centres. In addition to describing in detail the distribution channels, the study also looks at the implications for consumer protection.
General points of consideration concerning technology applications in microinsurance are reviewed, as well as taking a detailed look at software, handheld devices, SMS, mobile internet connectivity and online/offline synchronisation.
|Author:||Barbara Magnoni, Emily Zimmermann, Michal Matul and José Miguel Solana|
In 2012, the Haitian microfinance institution Fonkoze partnered with the ILO’s Microinsurance Innovation Facility and the MicroInsurance Centre’s MILK Project to use two tools – MILK’s Client Math tool and the Facility’s PACE tool – to better understand how and whether its Kore W property insurance product added value in the lives of clients and how it might be modified to improve that value. The product itself was modified shortly after the study and following the devastating effects of Hurricane Sandy in October 2012. It is currently under more comprehensive review and is not being offered with new loans. This brief summarizes the results of these two studies, illustrating the complementarities between the two tools and how a deeper understanding of a product’s value can translate into practical improvements that better serve clients. We find that while the Kore W product provided value to clients, there was space to improve that value within the financial and practical constraints Fonkoze faced.
|Author:||Richard Koven, Taara Chandani and Denis Garand|
The MicroInsurance Centre’s MILK project studied a group of both private and publically-supported health microinsurance programs (HMIs) in India to determine if a business case is evolving. MILK found that without government subsidized benefits, even long established, private HMIs in India are struggling to achieve scale and sustainability. This MILK Brief analyzes four programs in depth and provides composite analysis on a larger group of HMIs.
We find that the emergence of RSBY (Rashtriya Swasthya Bima Yojna program), a government funded scheme for the poor, is having a competitive impact on private HMIs, forcing them to consider offering complementary services. RSBY and other older government supported schemes, such as Yeshasvini, achieve scale well beyond what the private HMIs have, and this scale appears to drive down unit costs. However, with or without public subsidy, Indian HMIs are struggling to find a workable business model. Individual voluntary enrollment does not lead to significant and sustained participation, and thus is not a viable strategy - especially for private HMIs targeting relatively small populations. Increasing uptake requires a plan design that balances low premiums and attractive coverage, but given the particularly high costs of healthcare and the widespread presence of subsidized programs, private HMIs find it difficult to offer valuable products at affordable prices without subsidy.
Lack of scale in private programs constrains efficiencies that can control costs, and we see that expense ratio and not loss ratio is the primary driver of losses and lack of sustainability. However, the publically-supported programs appear to have higher loss ratios than those seen in non-subsidized programs. In sum, RSBY is a game changer, and while private HMIs struggle to adapt, the ingredients for a business case for health microinsurance have not come together for either private or public HMIs to date.
The discussion paper ‘Microinsurance and Social Protection’, published by the Microinsurance Network’s Social Protection Working Group, aims at addressing the role of microinsurance within social protection systems, stating that very few countries have formally discussed or even defined this role.
Social protection aims at preventing, reducing and eliminating economic and social vulnerabilities to poverty and deprivation. Microinsurance and, in particular, community-based insurance, are mainly seen as a mechanism to extend coverage of the existing social protection system and are, thus, often tightly regulated in order to ensure compatibility and compliance with the current schemes.
|Author:||Barbara Magnoni, Laura Budzyna, Danielle Sobol and Emily Zimmerman|
In this MILK Brief, the MILK project’s Client MATH team explores the value that Tanzania’s KNCU Health Plan offers its clients. The KNCU Health Plan is a collaborative effort of the multi-national microinsurance intermediary MicroEnsure, the Dutch NGO PharmAccess, and the Kilimanjaro Native Cooperative Union. In partnership with surveyors from the Tanzania Women Research Foundation (TAWREF), we identified and interviewed former patients – both members of the KNCU Health Plan and individuals with no health insurance coverage at all – about the cost and quality of a recent outpatient healthcare visit for a non-chronic condition.
We explore the total costs of the illness, looking not only at the direct cost of care but transportation costs and opportunity costs given that these can contribute to the incentives to seek care and when. We examine financial savings, but we also explore how the combination of lower costs and improved service value influence clients’ health-seeking behavior. We find that the product offers significant cost savings for the insured. We also see some evidence that by reducing costs and distances, the coverage influences clients to seek care sooner than uninsured respondents.
|Author:||Michael J. McCord, Roland Steinmann et Molly Ingram|
La micro-assurance connaît, dans le monde entier, un intérêt croissant de la part d’un grand nombre de parties prenantes et les activités y afférentes se sont multipliées ces dernières années. Cette étude a pour but de fournir un aperçu du statut et des dynamiques de ce secteur en Afrique. À ce jour, trois vastes études ont été réalisées sur la situation de la micro-assurance: the Landscape of Microinsurance in the World’s 100 Poorest Countries (Roth, et al, 2007), the Landscape of Microinsurance in Africa (Matul, et al, 2010) et the Landscape of Microinsurance in Latin America and the Caribbean (McCord, et al, 2012). La présente étude publiée par La finance au service de l’Afrique et la Fondation Munich Re vise à actualiser et développer l’étude réalisée sur l’Afrique en 2010. Pour la première fois, cette étude inclura une analyse des dynamiques de la micro-assurance en Afrique. Elle a bénéficié du soutien de la Banque africaine de développement, du Fonds pour l’innovation en micro-assurance de l’OIT et du Microinsurance Network. 214 organismes ont répondu à l’étude en fournissant des données sur 5112 prestataires de micro-assurance dans 39 pays, dont sept pays dans lesquels ce secteur n’avait pas été décelé en 2008. 598 produits ont été identifiés, couvrant un total de 44,43 millions de vies et de biens à fin 2011.
|Author:||Michael J. McCord, Roland Steinmann, Clémence Tatin-Jaleran, Molly Ingram and Mariah Mateo|
This landscape study aims to describe the current state of, and recent trends in, microinsurance in Africa. A total of 214 respondents from 39 countries where microinsurance was identified provided data for 511 providers and 598 products. The study identifies gaps in access to and the supply of microinsurance, as well as key bottlenecks to sustainable expansion of the sector. Its ultimate goal is to help industry stakeholders – insurers, delivery channels, policy makers, regulators, donors and others – identify areas for improvements that will eventually lead to better products and services for low-income clients.
|Author:||Laura Budzyna and Taara Chandani|
Can credit life microinsurance provide value to clients? In its latest Client Math study, MILK partnered with the Cambodian microinsurance provider MEADA to explore the value of a life microinsurance product that combines loan protection with a small cash payout in the even of a microcredit borrower's death. We interviewed family members of recently-deceased individual, some of whom were covered by insurance and some of whom were not, to better understand the costs they faced and how they covered those costs (including the role the insurance played).
We find that while the loan protection component of the product provided value to insurance beneficiaries by reducing their obligation to pay back the deceased's debt. In many cases, however, it fell short of eliminating the entire debt burden as loans from multiple sources were common. The product also pays a cash refund of the portion of the loan that the borrower had repaid at the time of death. This cash refund was on average too small to provide meaningful financial value, but its tangibility worked to enhance perceived value among clients. Although MEADA’s take-up is very high and its payout is fast, it is not clear whether this service value outweighs the still low limited value that the product provides. Thus, we feel that MEADA is poised to expand the benefits (in amount, form and/or duration) to better match the costs faced by low income people after a family member's death.
|Author:||Jake Kendall, Graham Wright, and Mireya Almazan|
In this paper, we use case studies and information gathered from a large number of interviews with practitioners and market participants in mobile financial services to synthesize some early lessons and provide practical guidance to providers. Our primary set of examples comes from Kenya, where MM is driving rapid industry restructuring and business model innovation. We also draw from select emerging cases in Bangladesh, India, Pakistan, Tanzania and Uganda. The intended audience for this paper is thus practitioners and market participants in the newly intersecting areas of financial startups, banking, and mobile payments - as well as donors, policy makers, and market observers with interest in this space.