2013 Asia Distribution Conference Kuala Lumpur, Malaysia 21 November 2013 Michael J. McCord President MicroInsurance Centre

Transcription

1 Microinsurance: Distributing insurance products of value to the masses 2013 Asia Distribution Conference Kuala Lumpur, Malaysia 21 November 2013 Michael J. McCord President MicroInsurance Centre

2 the protection of low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved The Microinsurance Network, Preliminary Donor Guidelines for Supporting Microinsurance What is Microinsurance? Risk-pooling products that are designed to be appropriate for the low-income market in relation to cost, terms, coverage, and delivery mechanisms the insurance protection provided by licensed entities within the country against specific risks which aims fundamentally to preserve the socioeconomic and personal and family situation of the low-income population Brazil an activity providing specific insurance, insurance-like and other similar products and services that meet the needs of the low income sector for risk protection and relief against distress, misfortune and other contingent events. The Philippines products providing risk protection for the low income with tailor made products. proportunately They tend to have: - Relatively low premiums - Defined and limited cover - Few, if any, exclusions - Preference for groups - Simple, rapid claims IAIS Guidance Paper Microinsurance must respond to the protection needs of a specific insurance group, and the intermediary working with the microinsurance organization must register its policy model at SBS (Superintendencia de Banca, Seguros). -Peru

3 A successful microinsurance product should be SUAVE: suave in terms of texture, performance or style Suggests a specific ability for dealing with people easily and without friction Pleasantly tactful and polite S.U.A.V.E. Simple Understood Accessible Valuable Efficient

4 Need Demand In the MILK Business Case studies, the success of microinsurance products is clearly linked to distribution.

5 -Formally trained and licensed -Selling to the educated -Fancy offices -High commission per sale Distribution Channels -Basic training -No license -Selling to the uneducated -Basic offices -Very low commission per sale

6 Who is distributing microinsurance (in Asia)? Source: Arman Oza, 9 th MI Annual Conf., Jakarta Nov. 2013

7 Microinsurance Learning and Knowledge MI is distributed through diverse avenues.

8 Microinsurance Learning and Knowledge Insurers are profitable and growing, but face increasing loss ratios and increasing competitive pressures Distributors are or could be profitable, but earn vastly different commissions and face different costs, which don t always correspond to the commissions charged. 21.3% Average Commission 13.6% Average Costs Clients get value from life and funeral coverage, but how much and what type of value depends on the size and timing of payments and on their understanding.

9 Microinsurance Learning and Knowledge VALUE - Financing sources In-Kind Funeral Microinsurance in Colombia USD INSURED UNINSURED Reduced consumption Gifts Informal Loans Income Savings/Assets MILK Brief #8: Doing the Math - Cashless Funeral Microinsurance in Colombia

10 USD Micro Funeral Cover Vs. Total Life Segment Prem per Policy Claims per Policy Expense per Policy Net per Policy Microinsurance Learning and Knowledge - Funeral Cover Total Life Segment

11 Microinsurance Learning and Knowledge In-Kind Funeral Microinsurance in Colombia 23% Commission 45% Illustrative distribution & premium collection costs 22% Additional incentives (multiyear deal) Outsourced call center (in / out) Door to door sales

12 Mapfre Micro Funeral Cover (per policy) NET USD ADMIN Microinsurance Learning and Knowledge 10 CLAIMS Net $(0.63) $(0.22) $2.47 $9.16 $10.37 Admin $25.80 $20.84 $21.45 $35.15 $33.90 Claims $17.80 $14.08 $11.96 $14.17 $12.23

13 13 The MicroInsurance Centre Developing partnerships to insure the world s poor mjmccord@microinsurancecentre.org