Microinsurance is Exciting, by Claude Penland, Actuary

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Microinsurance is generally designed for low-income businesses and individuals who aren’t typically covered by traditional insurance. It is usually sold at low premiums and low coverage limits / caps.

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Microinsurance is Exciting, by Claude Penland, Actuary

  1. 1. Microinsurance is Exciting By Claude Penland, Associate of the Casualty Actuarial Society www.InsTrends.com
  2. 2. What? <ul><li>Microinsurance is generally designed for low-income businesses and individuals who aren’t typically covered by traditional insurance. </li></ul><ul><li>It is usually sold at low premiums and low coverage limits / caps. </li></ul>
  3. 3. Who? <ul><li>Some insurance analysts have said that microinsurance is an untapped market for emerging economies, especially in India, Bangladesh, China, the Philippines and many parts of Africa. </li></ul><ul><li>Latin America should also see growth. </li></ul><ul><li>In fact, microinsurance has a possible customer base of around 4 billion people. </li></ul>
  4. 4. When? <ul><li>Interestingly, 200-300 years ago, sickness benefit societies, friendly societies and fraternal insurance plans were implemented in the United States and in Europe. </li></ul><ul><li>These plans were essentially microinsurance, too. </li></ul>
  5. 5. Why? <ul><li>Swiss Re reports that the microinsurance market has an eventual potential annual premium of up to $40 billion. </li></ul><ul><li>Credit life is presently a leading microinsurance product. </li></ul><ul><li>Going forward, some expect other insurance products that are found to be necessary in the developed world – for example, health and property insurance – to develop a microinsurance following as well. </li></ul>
  6. 6. How? <ul><li>Barriers to microinsurance growth include inadequate local regulation. </li></ul><ul><li>Actuaries can find it difficult to price products with a lack of appropriate actuarial risk and exposure data. </li></ul><ul><li>Insurance product distribution, claims handling and underdeveloped microfinance sectors are also high hurdles to jump. </li></ul><ul><li>And, finally, cultural acceptance and education can be significant barriers. </li></ul>
  7. 7. Wrap Up <ul><li>Some insurers and governments are considering private-public partnerships to help develop the microinsurance sector. </li></ul><ul><li>Reinsurance broker Guy Carpenter has even recommended microinsurance to reinsurers as a growing market where they could devote some excess capital. </li></ul><ul><li>It is indeed an exciting time to consider the microinsurance market. </li></ul><ul><li>Thank you! </li></ul>

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