The 5th International Microinsurance Conference wrapped up last week in Dakar, Senegal. The conference was organized by the Munich Re Foundation, the charitable arm of Germany-based insurance and reinsurance company Munich RE, and the Microinsurance Network. The Microinsurance Network is a member-based network providing a platform for information sharing and stakeholder coordination. Its central aim is to promote the development and proliferation of insurance products for low-income persons. The conference was held to discuss trends and recent developments in cost-effective insurance for the poor, with particular focus on health microinsurance (HMI) [1].
Munich Re Foundation is a private grant making foundation. Its focus areas include education and training, science and research, disaster prevention, environmental protection, and public healthcare. As of 2008, Munich Re had total assets of USD 342.8 billion, and an ROE of 15.3 percent. Munich Re serves a total of 5, 000 clients in 160 countries [2].
At the conference, Munich Re was joined by the International Labour Organization (ILO) Microinsurance Innovation Facility. The ILO presented a new study of microinsurance in Africa, which found that 14.7 million people living on less than USD 2 a day are covered by microinsurance in 32 African countries [1]. This represents approximately 2.6 percent of the African population. The study also found discrepancies between countries. For example, 2.7 percent of the Senegalese population are covered by microinsurance, while 18.5 percent are covered in South Africa. Presenters from the ILO added that while life insurance was becoming more prevalent in Africa, health insurance products only covered 1.9 million people. Thus while there has been an 80 percent increase for most African countries in people covered by microinsurance from 2005 to 2008, there are still several challenges facing HMI specifically [1].
Prisca Soares, secretary general of the African Insurance Organization (AIO) said at the conference that she saw two major challenges facing HMI. “The first is education, but not only for the population; the providers too need to have a deeper understanding of the target market. The second is innovation. We need to think outside of the box and look at the needs of each individual population group, know their culture and customs, and it’s only by doing this that we will be able to offer good-value microinsurance products” [1].
Dr. Shreeraj Deshpande, head of the health insurance department at India-based insurance company Bajaj Allianz, adds to these challenges the issues of finding a distribution model which works at low costs, and establishing a process that allows distributors to handle a large number of insurances with very low premiums. Bajaj Allianz has implemented microinsurance schemes which are run and controlled by local community organizations. A community collects the premiums and administers their use. Bajaj Allianz receives 33% of the premiums and deals with cases “at the higher end of the spectrum” [3].
A past MicroCapital story the successes of an organization dedicated to HMI, Grameen Kalyan. Through the Grameen Kalyan microinsurance scheme, HMI clients pay a yearly insurance premium (USD 1.73 a year for Grameen Bank members and USD 2.17 for non-Grameen Bank members) which covers up to six family members [4]. For more details about this scheme and Grameen Kalyan, please visit https://www.microcapital.org/microcapital-story-grameen-kalyan-offers-health-microinsurance-for-usd-173-per-year-and-partners-with-pfizer-inc-ge-healthcare-and-mayo-clinic-is-it-economically-viable/. A similar organization, Caregiver, is also covered by MicrCapital: https://www.microcapital.org/microcapital-story-scalable-and-sustainable-micro-health-insurance-just-around-the-corner/.
By: Diya Chopra, Research Associate
Bibliography:
[1] Munich Re Foundation
[2] Munich Re Annual Report 2008
[3] Bajaj Allianz
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