Issue Digest-Microinsurance

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4 | Issue Digest: January 2013 2. Microinsurance Innovation Facility 3. 7th International Microinsurance Conference 2011 4. Commercial insurers in microinsurance – Micro insurance network, 2011 5. Protecting the working Poor, ILO, 2012 6. Microinsurance at Allianz Group, September 2012 Microinsurance has seen significant growth in Asia Pacific, particularly in markets such as India and China. Asia is seen as a region with a vast potential for microinsurance as it is home to about 70 percent of the world’s low-income population. Largely, Bangladesh, the Philippines and Indonesia are witnessing rapid growth in microinsurance. While Africa remains an undertapped market for microinsurance, insurers are increasingly making an effort to cover the African population by introducing need-based and easy-to-understand products. In Latin America, Brazil was one of the first markets to introduce microinsurance with Mexico, Peru and Colombia following suit. In Central and Eastern Europe, growth in microinsurance has not been 2, 3, 4, 5, 6 as swift as compared to Asian and Latin American regions. Microinsurance products* 14% 12% 14% 8% Life endownment Credit Health Accident & disability Property Others*** Distribution channels** MFIs/Banks NGOs CBOs Agents and Brokers Retailers Others**** © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved. 23% 29% * , ** The figures correspond to a survey conducted by Microinsurance Network in 2011. The study sample is composed of: 20 insurance companies, two insurance and reinsurance brokers, and two reinsurance companies. *** “Others” include legal expenses, index and casualty products. “Index” insurance pays when certain parametric triggers are met, for example crop index insurance might make payments based on rainfall data or when temperature drops below freezing. The challenge is establishing parametric triggers which minimize basis risk. **** “Others” include, local offices of development agencies, direct distribution by the insurance company itself, associations, utility companies and self-help groups, CBOs, government, employers, churches, and cooperatives. 8% 29% 9% 9% 25% 20%
02 Products and innovations Insurers are driving innovation and introducing microinsurance products that are simple to understand as well as low in premiums. Despite new product developments, life insurance still remains the most prevalent microinsurance product, mainly driven by microfinance institutions as it provides life insurance protection to borrowers, often grouped with microcredit. Credit life protection facilitates micro-lending, providing a direct benefit to the lender (enabling the loan to be repaid in the event of death) but only limited direct benefit to the insured (enabling them to access microfinance); therefore, industry practitioners are increasing focus on products that offer comprehensive risk coverage. 6 Agriculture and health microinsurance products are gaining popularity; however, they remain complex in terms of underwriting. These products typically require a catalyst such as subsidized premiums either in part or full. A public private partnership could be the key to implement such complex products. Governments and insurers need to increase insurance awareness among the low-income population so that simple products with no hidden terms can be introduced to provide protection to the low-income population rather than to large institutions. Insurance and product awareness, transaction costs, availability of easy-tounderstand products, infrastructure and need-based products that are affordable and create shared value are some challenges that the insurers face while designing products for the low-income group. 7 Agriculture and health microinsurance products are gaining popularity; however, they remain complex in terms of underwriting. 6. Micro-Insurance: A Largely Untapped Market, November 2011 7. Protecting the working Poor, ILO, 2012 Case studies—product innovation Aon Bolivia recently launched a new retirement product targeting the working class population, which requires regular payments for 100 months and thereafter entitles policyholders to receive double the monthly payment for the next 70 months. In India, ICICI Prudential Life has partnered with a tea producer to offer unit-linked endowment products to company workers at tea plantations. The product comes with premium guarantees and flexible liquidity options. In 2009, PICC of China introduced a pilot microinsurance program insuring internal migrants against accidents and disease. All the above are examples of innovation primarily due to need-based products designed after studying the requirements of specific groups. Sources: Company websites, FactSet, Swiss Re Sigma Report: Microinsurance – risk protection for 4 billion people, 2010 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
Page 1 and 2: KPMG INTERNATIONAL KPMG INTERNATION
Page 3: 01 What is microinsurance? Microins
Page 7 and 8: 04 Regulations Microinsurance regul
Page 9 and 10: KPMG information Further reading Mi
Page 11 and 12: Notes Issue Digest: January 2013 |

Issue Digest-Microinsurance

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