• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
AMERMS Workshop 16: Effective Micro Insurance to Reduce Vulnerability (PPT by Nelson Kuria)

AMERMS Workshop 16: Effective Micro Insurance to Reduce Vulnerability (PPT by Nelson Kuria)




Effective Micro-Insurance and Micro Health Insurance Programs to Reduce Vulnerability
ROOM: Tsavo B
Chair: Mr. Richard Leftley, CEO, MicroEnsure, USA
Panelist: Mr. Yoseph Aseffa, Chief Technical Advisor, Microinsurance, International Labour Organization (ILO), Ethiopia
Panelist: Mr. Nelson Kuria, Managing Director, Co-operative Insurance Company of Kenya Limited (CIC), Kenya



Total Views
Views on SlideShare
Embed Views



2 Embeds 10

http://www.slideshare.net 6
http://microcreditsummit.org 4



Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
Post Comment
Edit your comment

    AMERMS Workshop 16: Effective Micro Insurance to Reduce Vulnerability (PPT by Nelson Kuria) AMERMS Workshop 16: Effective Micro Insurance to Reduce Vulnerability (PPT by Nelson Kuria) Presentation Transcript

      • Presented by :
      • Nelson C. Kuria, OGW
      • Managing Director/CEO-CIC INSURANCE
      Friday . April 9, 2010
    • Insurance Performance Relative to the Economy & Players
      • More developed microinsurance products
          • credit life
          • Personal accident & disability
          • health
          • There are significant initiatives towards development of :
          • Livestock insurance
          • weather index based insurance
          • Micro pension plans and
          • property insurance ( fire, burglary and all risks)
    • Why the poor needs insurance
      • From a research Adapted from Cohen and
      • Sebstad (2006), Churchill (2007) the
      • priority Risks in Kenya in order of
      • vulnerability are as follows .
          • Illness,
          • Death,
          • Economic Downturn,
          • Theft,
          • Fire,
          • School Fees,
          • Bad Debts
    • Coping mechanisms Risk Immediate impact: loss of income/assets/need for lump sum cash Low stress : modify consumption, improve family budget, draw on insurance formal /informal Medium Stress: use savings, borrow, diversify income resources etc High Stress : Sell HH assets, default loans, close shop etc Reallocate household resources , Reduce unnecessary expenditures ,temporary change in lifestyle Depleted financial reserves Indebtedness - claim on future income flow Loss of customers, Reduction in scale of business Loss of productive capacity, loss of income , depleted assets, untreated health problems, isolation
    • CIC Product design & Administration
          • Market Research
          • Sample design
          • Pricing
          • Systems development
          • Staff training and pilot testing
    • Effective credit life with fire and burglary extension
        • Apart from the traditional group credit life insurance which
        • covers members of the co-operative movement in case of death ,
        • permanent disability and funeral expenses, CIC has recently
        • developed a low ticket insurance package for the clients of the
        • MFIs and banks to provide the following
        • Covers borrowers in case of death or total permanent disability
        • Provide an inbuilt funeral expenses of the borrower
        • Covers assets/property by providing them security and peace of mind in the event of fire gutting down their business or in the event of loss of stocks due to theft.
    • Lessons Learned
      • CIC has successfully implemented these innovative insurance products where the MFIS and banks offers credit facilities to low income households through the partner –agent model.
      • CIC is now is applying the same model with other credit organizations to expand provision of microinsurance packages to low income households in Kenya
      • CIC aims to expand the provision of low ticket insurance packages and services to the low income households in Kenya while at the same time being competitive in providing quality insurance products for higher income groups.
      • CIC places dual emphasis on financial sustainability and operational efficiency by using Information Communication and Technology to enhance productivity and cost reduction and also employing innovative risk mitigation techniques.
      • Currently CIC insures over 75,000 clients under this scheme
    • Effective Micro health-Bima Ya Jamii (family insurance)
        • With the challenges experienced in providing micro health to the low income
        • households , CIC developed a three in one insurance package in partnership with National Hospital Insurance Fund which covers :
          • comprehensive hospitalization,
          • personal accident and
          • funeral expenses for the clients
        • First a questionnaire was randomly conducted amongst 7,000 delegates of Kenya Women Finance Trust during their annual general meeting to assess their insurance needs. Out of 2,407 women who completed the questionnaire , 2,337 which is 97 % indicated that they would like Kenya Women Finance Trust to introduce the three in one insurance package
        • Objective of this package is to provide access to low cost hospitalization from a government institution alongside other insurance packages from CIC to the clients of microfinance institutions and other groups.
    • Lessons learnt
      • Compulsory policies to all members of a Group is better than voluntary policies in order to attain critical mass needed for sustainability. However for sustainability and creating an insurance culture amongst the low income households, the voluntary products should be encouraged.
      • For sustainability there has to be close monitoring of policy renewals in order to improve retention rate and reduce anti-selection (Individuals who signup cover due to a specific health problem are likely to exit after benefiting).
      • The product should be as inclusive as possible in scope of cover in order to minimise exclusions and gain acceptability in the target market. This will help to eliminate scepticism associated with conventional insurance products.
      • The target market is characterised by poverty and low income levels hence the more need to keep premiums low and affordable pegged on the critical mass.
    • Lessons learnt -continued
      • It is important to have in place a consistent training programme for the distribution channel in order to minimise product distortion.
      • Strict controls needed in order to contain claims cost considering the low product pricing and high moral hazard associated the micro-sector.
      • Patience and consistency (No anticipation of immediate financial returns).
      • Working with strategic partners is very crucial in the development of the micro insurance policies for low income households
    • Conclusions:
        • Key challenges facing the micro insurance industry in Kenya
        • Lack of an adequate understanding of micro-insurance and awareness of existence by the Kenyan populace.
        • A dire need to work out how to best expand outreach beyond the microfinance borrowers and savers and to meet the needs of the wider market segment
        • Investing in client and staff education is therefore critical as this will enable staff to better explain to clients how insurance and more specifically the products being sold actually work. This in turn will lead to higher levels of client satisfaction with the microinsurance product
        • In order to broaden access to the mass market the industry will have to find new ways of distributing micro insurance which involve lower transaction costs through suitable technology to play an increasing role in the distribution channel such as M-pesa
    • Conclusions:
      • Lack of regulatory framework for Micro-insurance busines s
      • Appropriate reinsurance programmes
      • Suitable administration software systems are expensive
      • Lack of Trust on the consumer side
              • Reputation of insurance companies