MicroInsurance Centre Policy Statement: MFIs and Microinsurance

This document, outlines the MicroInsurance Center policy statement and focuses on the possibilities available to donors and microfinance institutions (MFIs) in the microinsurance sector. The author states that there is only limited capacity available with donors and MFIs despite a growing interest in microinsurance. He mentions four reasons for these organizations to tread carefully:

• Insurance and microfinance should be treated as different businesses as they require significantly different staff capacity and experience, analytical abilities and risk management techniques.
• Insurance provision and financial services should not be mixed.
• Complete capability assessment should precede foray in microinsurance.
• Issues pertaining to regulation, supervision and appropriate control of MFIs should be considered.

The author mentions options available with the donors for increased involvement and innovation but advises them against promoting MFIs to add microinsurance business on top of their microfinance business. These options include:

• Assistance in documentation and dissemination of insurance related activities,
• Provision of financial and technical support to develop and test innovative insurance products,
• Promotion of partnerships between insurers and MFIs.

The document further mentions the Microinsurance Center policy statement's key features for betterment of the client, the MFI and the insurer:

• Focusing attention, tools, and knowledge on MFIs and corporate insurers to help them leverage their individual strengths.
• Work closely with agencies that are active promoters and practitioners of microinsurance.
• Promote documents and tools related to microinsurance practice.