MR Microinsurance_2012_03_29.indd - International Labour ...

20 Emerging issues
Mutuals provide some key advantages in microinsurance especially related to
their proximity to members, which permits a better understanding of their
needs, facilitates claims settlement with better controls for fraud, and tends to
engender significant trust from policyholders. They also appear to be particularly
well suited to providing superior client value, as evidenced by an evaluation of
microinsurance providers in three countries (see Chapter 15).
Even with these advantages, however, most mutuals do not appear to constitute
an effective means to reach millions of low-income households as they are
often limited by membership, governance, capacity, small capital reserves, and
regulation. Although they are still common in some regions, they are being displaced
in many countries by the entry of commercial insurers into the lowincome
market. Mutuals are also being forced to make adjustments from the
other side as well, as more governments pursue universal health cover. For example,
in India, health insurance was pioneered by several mutuals and communitybased
organizations, which now need to reposition themselves in view of the
expansion of mass health cover from the Government (see Chapter 20).
This trend does not mean that mutuals are becoming irrelevant. Experience in
India suggests that these schemes are effective innovators that can test new
approaches and provide valuable lessons that others can take to scale. Some countries,
particularly in Africa, have initiated efforts to achieve universal health cover,
and the infrastructure that mutuals have built up over the years, for example in
Ghana, Mali and Rwanda, serves as an important foundation to extend coverage to
rural areas and workers in the informal economy (see Box 2.1 and Kundra and Lagomarsino,
2008). Indeed some exceptional cases, such as CARD MBA in the Philippines
and Cooperative Insurance Company (CIC) in Kenya (see Chapter 18), have
shown that the cooperative model can be a basis for scale in microinsurance.
The big news is the tidal wave of commercial insurers entering the lowincome
market. A Microinsurance Network study shows that at least 33 of the
world’s largest 50 commercial insurance companies offer microinsurance, but
many started recently. Of the 24 respondents that provided longitudinal data,
only five had relevant products in 2000, and seven in 2005. The rest have started
since then, clearly demonstrating that microinsurance is being offered by an
increasing number of commercial companies, with perhaps more still to come
(Coydon and Molitor, 2011). While they lack important advantages enjoyed by
locally based mutuals, some have managed to compensate for their deficiencies
through partnerships, technology and other means. This group of insurers is well
positioned to achieve massive scale, although it remains to be seen whether their
products will provide value to the poor.
The insurers’ motivations for entering this market, shown in Figure 1.2,
illustrate the interesting combination of social and commercial objectives, BoP
profits and corporate social responsibility (CSR). It is also important to consider