Life microinsurance in Colombia has been a growing and profitable business, contributing materially to both the top and bottom line of companies engaged in the sector. MILK's latest brief provides an overview of our business case work in Colombia, focusing on the experience of the insurer MAPFRE, which reflects these trends with significant growth in its Colombia-based life microinsurance business, but has also enjoyed a privileged position in Colombian microinsurance market, a position which may be changing. MAPFRE's life microinsurance market share in 2012 was 23% for the products we studied, which can in large part be ascribed to being the first to market in partnership with a public utility. The high growth rates in the life microinsurance sector slowed dramatically in 2012 for MAPFRE and others. This leveling off appears to reflect increasingly crowded and competitive distribution channels and a decline in funeral cover sales as a result of a new regulatory restriction.

The life microinsurance sector in Colombia is at a critical juncture. Intensifying competition, effective but expensive distribution and an evolving regulatory environment have raised questions about how the next five years will unfold. Our follow-up paper later in 2013, including additional data on MAPFRE's operations as well as several other insurers and distribution partners in Colombia, will shed additional light on how the market is expected to develop beyond this juncture. 

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.

Aunque diferentes estudios han explorado la demanda de productos de microseguro, los factores que influyen en la decisión de compra de un microseguro de vida continúan sin conocerse, así como tampoco aquellos que influyen en su retención.

Con el fin de entender mejor el valor esperado del microseguro de vida por parte del cliente, el proyecto MILK estudió la demanda de un producto de microseguro de vida que se ha ofrecido a 1.8 millones de prestatarios de Compartamos Banco, de México, utilizando una Prueba de Control Aleatorizada (RCT). Compartamos vende un microseguro de vida en módulos de 15.000 pesos mexicanos (equivalente a cerca de US$1.160 cuando se hizo el experimento) de cobertura, y subsidia esta última ofreciendo un módulo gratis a todos los prestatarios de su comunidad. Los prestatarios tienen la opción de comprar hasta 7 módulos adicionales. Este estudio mide el impacto de eliminar la oferta del módulo de cobertura gratis, así como dos enfoques diferentes de marketing para la demanda, ayudando a esclarecer los vínculos entre valor para el cliente, precio, información y demanda.

El Proyecto MILK se asoció con la IMF "Compartamos Banco" en México, utilizando su metodología "Client Math" para explorar algunos de los interrogantes que se encuentran abiertos respecto de si un producto de seguro de vida puede ofrecer algún valor a clientes de bajos ingresos. Compartamos ofrece el beneficio de un seguro de vida con todos sus préstamos "Crédito Mujer" y ofrece una cobertura adicional voluntaria a aquellas clientes que quieran aumentar su suma asegurada. El estudio exploró el papel de este producto de microseguro en ayudar a familias de bajos ingresos a hacerle frente a las consecuencias financieras resultantes de la muerte de uno de sus miembros, tratando de entender de qué manera se ajustaba el producto de seguro a la gama de herramientas que estas familias tenían a su disposición.

El proyecto MILK se asoció con MAPFRE Colombia en el Departamento del Magdalena utilizando su metodología de "Client Math" para explorar la propuesta de valor de una póliza de microseguro integral contra daños a la propiedad para las prestatarias de la IMF "Fundación delamujer". El producto de MAPFRE era un producto de seguro modular y voluntario mediante el cual los clientes de la Fundación delamujer podían combinar de diferentes formas coberturas contra daños a la estructura o a los contenidos, así como una cobertura por tres meses de las cuotas del préstamo o por lucro cesante incidental. El producto estaba diseñado con el fin de hacerlo relevante y asequible hasta para los clientes de más bajos ingresos de la Fundación delamujer, quienes se presumía que escogerían la opción más económica de cobertura de lucro cesante y cuotas del crédito.

The MILK Project partnered with MAPFRE Colombia in the department of Magdalena, using its Client Math methodology to explore the value proposition of a comprehensive property microinsurance policy for borrowers of the MFI Fundación delamujer. MAPFRE's product was a modular, voluntary insurance product, whereby Fundacion delamujer clients could mix and match structural and contents damage coverage as well as coverage for 3 months of loan payments or of incidental loss of income. This design aimed to make the product relevant and accessible for even the lowest income clients of Fundacion delamujer, who could choose the cheapest coverage options for lost income and loan payment. We find that MAPFRE's product fell short of helping families fully recover from flood damages and lost income and that the fungibility of money and timing of payments makes the story of clients' financial responses particularly complex.

The MILK project partnered with MicroEnsure and TSKI to better understand the value of the calamity insurance for TSKI’s clients who made claims on this insurance after this devastating event. We found that aid and government support was made available to most respondents in our study, but was minimal compared to their needs. The support of friends and family was also limited. The need for an additional and efficient source of funds was evident, and the TSKI product played a crucial role in filling this gap. Long delays (averaging 42 days) did reduce the overall value of the product, leading clients to use more inefficient financing strategies for up-front costs in the meantime. However, the knowledge that the insurance benefit was forthcoming may have helped clients access other sources of funds, including low-cost loans from friends and family, which the uninsured did not access to the same degree. Trusting that the payment would arrive, insured families were also less likely than the uninsured to deplete their savings to cover the costs of repairs, preferring instead to reduce their spending while they waited for the payment. Once received, the product played an important role in helping the insured to recover.

Is there a business case for microinsurance intermediation?  The MicroInsurance Centre’s MILK project is exploring this question by studying the commercial viability of three microinsurance-only multinational intermediaries: MicroEnsure, PlanetGuarantee, and AKAM. Our first brief on this subject analyzes the performance of these programs through their early years (until 2010), and an update showing their subsequent development is planned for later this year. The short answer to this question, based on the early operations of these three intermediaries, is that there is not a business case for a multinational microinsurance-only intermediary, but that there may be potential for a business case to develop.

The three programs took relatively similar initial approaches and experienced similar struggles, and none had achieved financial sustainability by 2010. In particular, all three struggled to balance the markets' need for comprehensive intermediation services (including research, product development, and support to all parties along the value chain) with their own needs to keep costs low and achieve scale. Unique circumstances and different approaches to the role of intermediation, however, lead to some nuanced lessons about how a business case for microinsurance intermediation may emerge.  

Lea esta versión “condensada” de MILK Brief #16: "Doing the Math" - Life Microinsurance in Mexico que está disponible aquí en el sitio web del MicroInsurance Centre (Centro de microseguros). En este documento de sólo dos páginas, se presentan los resultados clave de este estudio de caso y también una lista de las publicaciones de MILK.

Lea esta versión “condensada” de Informe de MILK #18: “Sacando los cálculos” con el microseguro daños a propiedad en la costa de Colombiaque está disponible aquí en el sitio web del MicroInsurance Centre (Centro de microseguros). En este documento de sólo dos páginas, se presentan los resultados clave de este estudio de caso y también una lista de las publicaciones de MILK.

Life products are the most common types of microinsurance both worldwide and in Mexico, where almost 14 million people are covered by life microinsurance. For these studies, the MILK team partnered with Compartamos Banco in Mexico to study an innovative life product Compartamos offers with all of its Credito Mujer loans, reaching over 1.8 million borrowers. For this life product, Compartamos subsidizes the basic level of coverage, automatically providing it with the loan, and clients can voluntarily purchase greater levels of coverage.

Using a randomized control trial methodology, "Protecting those Left Behind" evaluates the purchase decisions clients make.  This experimental study sought to understand expected value through identifying the effects of different marketing approaches and how providing, or not providing, basic subsidized coverage influences purchase decisions. The paper shows that when the subsidized coverage was removed, clients purchased more coverage, although they did not purchase enough to achieve their previous subsidized coverage level. While the study did not find a significant difference in up-take due to emotional versus factual marketing approaches, a clear benefit was seen simply from formalizing the marketing process. Further, the experience of Compartamos does support the use of subsidies to develop trust and build an insurance culture if the right product value components are evident to clients.

Life products are the most common types of microinsurance both worldwide and in Mexico, where almost 14 million people are covered by life microinsurance. For these studies, the MILK team partnered with Compartamos Banco in Mexico to study an innovative life product Compartamos offers with all of its Credito Mujer loans, reaching over 1.8 million borrowers. For this life product, Compartamos subsidizes the basic level of coverage, automatically providing it with the loan, and clients can voluntarily purchase greater levels of coverage.

 MILK Brief #16 is a MILK Client Math study exploring the value clients receive from the product and its different levels of coverage. The Brief explores financial value by examining how the product helps low-income families cope with the financial consequences of a death and how the insurance product fits into the range of tools available to those families.

Read this "condensed" version of MILK Brief #15: "Doing the Math" - Catastrophe Insurance in Haiti. This handy, two-page document presents key findings from this case study as well as a one-page overview of the MILK Project and its publications.

Each hurricane season in Haiti threatens to erase the fragile progress made since the 2010 earthquake, and small business owners are among the most vulnerable. MILK partnered with the microfinance institution Fonkoze to explore the value of its Kore W catastrophe insurance in helping clients cope with the consequences of a flood. The product, which is mandatory for Fonkoze borrowers, covers any outstanding loan balance, provides a cash payout of USD125, and pre-approves clients for a new loan. We interviewed insured (some of whose claims were rejected and some approved) and uninsured small business owners in the wake of a 2011 flood to understand the costs they incurred and how they coped. We find that while the insurance payout covered only a small portion of the total losses, in combination with continued access to credit it was instrumental in helping clients to begin the recovery process. Long delays in claims payment (which Fonkoze has since begun to improve but remain long due to the product's design) led clients to undergo difficult financing strategies while waiting for the insurance benefit.  Nonetheless, the Kore W product helped many clients to avoid selling assets as many of the uninsured were forced to do. 

This document contains a presentation by MILK Project Director Michael J. McCord at the 8th International Microinsurance Conference held on 6-8 November in Dar es Salaam, Tanzania. The presentation reports on findings from the case study in which MILK partnered with Mapfre Colombia to study their funeral insurance policy. This presentation discusses both business case and client value perspectives.

This document contains a presentation by the MicroInsurance Centre and the MILK Project at the 8th International Microinsurance Conference held on 6-8 November in Dar es Salaam, Tanzania. The presentation touches upon Client Math and its contribution to Client Value Lessons, Client Value learning methodologies, study implementation, "practice surveys," and discussion of some key findings.

This document contains a presentation by MILK Client Value Project Manager Barbara Magnoni given at the 8th International Microinsurance Conference held on 6-8 November in Dar es Salaam, Tanzania. The presentation gives an overview of client value in health microinsurance, how MILK's Client Math helps us understand financial value, findings from Client Math studies of health insurance, and how these lessons can inform product design.

Life microinsurance has grown quickly and is well established throughout the Philippines, and as a result, the business case is widely assumed to be strong. The MILK project is working to test the accuracy of this assumption. Our analysis focuses on a cluster of five programs that represent the broad range of life microinsurance activity in the Philippines: CARD, TSPI, Prudential, CLIMBS, and MicroEnsure.

Life microinsurance is among the simplest types of microinsurance in terms of product design. It is also a product line for which the business case is often seen as the clearest. Still, we find unexpected complexity on both fronts. Seemingly “simple” products have coverage that is in fact quite complex, and the seemingly “clear” business case can be ambiguous. This brief presents our initial findings; we are continuing to explore these issues and hope to answer more of the open questions over the next year. In the meantime, we look forward to discussing these issues with you and hearing your thoughts.

This "condensed" version is a summary of the full report on this project. MILK studied the demand for a life microinsurance product offered to over 1.8 million clients of Compartamos Banco in Mexico with a randomized control trial (RCT). The study measured the impact or price and marketing on insurance purchase and coverage, shedding light on the links among client value, pricing, information, and demand. 

Read this "condensed" version of MILK Brief #18: "Doing the Math" with Property Microinsurance in Coastal Colombia which will be coming soon! This handy, two-page document presents key findings from this case study as well as a one-page overview of the MILK Project and its publications.