Commercial Insurers in Microinsurance

This study explains the incentives and long-term perspectives for the involvement of commercial insurance companies in the low income market.

The study pool comprised of 20 insurance companies, two brokers and two reinsurance companies. Each one completed a survey addressing their current microinsurance schemes as well as their views and the challenges they face in microinsurance. Findings include:

• Main reasons for the survey respondents to get involved in microinsurance were to access new markets, financial profit expectations, corporate social responsibility and brand concerns as well as encouragement from the government to serve the low income market;
• Life, endowment products, accident and credit insurance were most common and represent 66 percent of all their products;
• According to the survey respondents, the main difference between microinsurance and their regular insurance products is the lower premium/benefit ration and the trend towards implementing less exclusion;
• Development of distribution channels and awareness raising activities with partners like MFIs, NGOs, and governments are considered essential for outreach and growth.

The study demonstrates that the commercial insurance companies are committed to this new market, where they perceive tangible and intangible benefits. Based on lessons learned, the study predicts that microinsurance services for low income households will become more competitive and affordable.