Developing inclusive insurance markets
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Developing inclusive insurance markets



A holistic and systematic approach to market development can overcome barriers to serving insurance to the low-income population. Collaboration between supervisors/regulators, industry players, policy ...

A holistic and systematic approach to market development can overcome barriers to serving insurance to the low-income population. Collaboration between supervisors/regulators, industry players, policy makers, and donors is already showing positive results in some countries.



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    Developing inclusive insurance markets Developing inclusive insurance markets Presentation Transcript

    • Developing Inclusive Insurance Markets Craig Churchill ILO’s Microinsurance Innovation Facility
    • Discussion flow 1. The ILO’s Microinsurance Innovation Facility 2. What is microinsurance? 3. The different stages of market development 4. The case of Zambia 5. The case of the Philippines 6. Concluding thoughts 2
    • 1) The ILO’s Microinsurance Innovation Facility  Launched in 2008  Housed at the International Labour Organization based on the work of the Microinsurance Network  US$34 million grant from the Bill & Melinda Gates Foundation  Additional support provided by Zurich, AusAID and Munich Re Foundation  Supported over 60 action research partners across Asia, Africa and Latin America Beliefs “We believe in the power of insurance to change people’s lives, to protect their health and their assets, and to give them peace of mind to make investments for the future” Mission “Our mission is to increase the availability of quality insurance for the developing world’s low-income families to help them guard against risk and overcome poverty”
    • 1) Our activities Action Research Partners New and improved products and models + Better informed consumer = Improved risk management practices among the working poor Dissemination through workshops, conferences, publications, website, etc.
    • 1) Our work 2008-2013 About us
    • 2. What is microinsurance? “…not a specific product or product line. It is also not limited to a specific provider type. Microinsurance is the provision of cover to a specific market segment, i.e. low-income persons.” ~ IAIS Issues Paper (2007) A new market opportunity for the insurance industry to make itself relevant for the majority of the population who do have have insurance. 6
    • 2. And why do we care? Outcomes & Impacts Evidence available Financial protection Lower out-of-pocket expenses Less burdensome risk-management strategies Higher investment and production 15  12  10  5 Better health Access to health services Utilization of health services 7 Improved health outcomes 7 14 10 3 4
    • 3. Stages of market development Nascent Few MI products, mainly credit life Growing Simple products are scaled up Diversifying More complex products are developed Competition Clients have choice of products and providers Increase in quality products, diversity of distribution channels, and demand by consumers 8
    • 3. Barriers to market development • Awareness and interest • Skills (basic) • Data • Understanding & trust 9 • • Supply side Demand side • Limited distribution channels • Viability concerns • Product value • Skills (advanced) • Effective publicprivate partnerships • Consumer protection
    • 3. The stakeholder approach  Many stakeholders can impact the development of inclusive insurance. Risk carriers, delivery channels and associations Regulators and supervisors Policy makers Enablers and donors  There is a need for a coordinated and systematic process for market development, where capacity building, research in the pre-competitive space and innovation would be collectively designed and shared. 10
    • 3. Stages of development: Zambia and the Philippines Nascent Few MI products, mainly credit life ZAMBIA 11 Growing Simple products are scaled up Diversifying More complex products are developed PHILIPPINES Competition Clients have choice of products and providers
    • 4. Zambia: Microinsurance before 2009 Regulation • No specific regulations on microinsurance • Supportive regulator • Hesitant and risk averse providers 12 Product • Product offerings narrow and limited • Mismatch between demand and supply • Inappropriate and unaffordable products • Complex and complicated contracts Consumer Awareness • Low understanding • Limited experience • Misconceptions • Distrust of insurers
    • 4. Zambia: Accelerating microinsurance development • Conducted a diagnostic assessment: opportunities and barriers for inclusive insurance markets • Created a steering committee (SC) and multi-stakeholder technical advisory group (TAG) to oversee strategy development and implementation process • Microinsurance development strategy/action plan finalised in January 2010 13
    • 4. Zambia: Microinsurance development process • • • Regulatory review and formulation • • 14 Technical assistance to regulator Industry consultative workshops • • • • Supplier assessment study Aggregator study Finscope analysis Supplementary studies on the supply side • • Business opportunity awareness Microinsurance Innovation Seminars Exposure visits Capacity diagnostic study Training workshop Technical assistance Microinsurance Acceleration Facility Capacity building interventions Supporting product development and marketing • • • Consumer education and product awareness Microinsurance marketplace Media programmes Technical assistance to insurers and distributors
    • 4. Zambia: Market developments 2009 2012 2 active insurers among 12 insurers 5 active insurers (Life) and 3 in the pipeline (non-life) Less than 1% microinsurance penetration Mainly credit life < 90,000 policyholders estimate Coverage Life: 220,000+ Credit life: 115,000+ Limited distribution mainly via MFIs and banks 15 Broader distribution: MFIs, banks, mobile network operators, labour unions, post office, microenterprise associations, community based agents
    • 5. Philippines: Key interventions Microinsurance defined Microinsurance providers identified Formalization process clarified Microinsurance agents/Brokers created Reporting standards established MBA Chart of Accounts Revised • • • • • • Market Conduct • • Prototype product developed: composite product Contracts simplified Product Innovation and Development POLICY AND REGULATORY ENVIRONMENT Financial Literacy and Advocacy • • 16 Branding and slogan conceived Trainings on MI advocacy and seminars Consumer Value and Protection • • Performance standards formulated Alternative dispute resolution mechanism established
    • 5. Philippines: Market developments 2008 2012 2 Commercial insurers 6 Mutual Benefit Associations 19 Mutual Benefit Associations 7 Products approved 89 Products approved (Life – 38, Non-life – 25, MBAs – 26) About 3 million individuals covered –50% informal insurance, mostly credit life 17 35 Commercial insurers (Life – 17, Non-life 18) About 12 million individuals covered – excluding government sponsored schemes
    • 6. Concluding thoughts • Market development can be accelerated • Need for in-depth analysis of the barriers for market development • Create buy-in through a well-structured stakeholder process • Leadership by supervisor and key industry persons is critical • Customize intervention to support progressive development • Goal, action plan, strategy, market development interventions, performance indicators • A coordinator is needed to facilitate the process of implementing the action plan • Focus on generating scale and consumer value, and ultimately consumer protection 18
    • Discussion, Q&A Craig Churchill International Labour Organization Tel +41 22 799 6242 19 Email