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.

1. Developing Inclusive
Insurance Markets
Craig Churchill
ILO’s Microinsurance Innovation Facility

2. 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

3. 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”

4. 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.

5. 1) Our work 2008-2013
About us

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. Discussion, Q&A
Craig Churchill
International Labour Organization
Tel +41 22 799 6242
19
Email churchill@ilo.org