Insuring the Poor and Vulnerable. Helping the poor weather life s storms. Richard Leftley - CEO, MicroEnsure

Transcription

1 Insuring the Poor and Vulnerable Helping the poor weather life s storms Richard Leftley - CEO, MicroEnsure

2 The poor do not buy insurance

3 What Causes This Lack of Access? The poor face huge risk which is financed informally Poor value for money Insecure as unregulated Insurance is safety net 24% of those entering hospitals leave below the poverty line

4 Supply from insurers is available Commercial insurance companies are interested in this market They need some help accessing it Life and property insurance is available Crop and health harder to secure

5 Microinsurance landscape Market estimated to be 3bn people by Swiss Re Less than 3% have access to any insurance products Most dominant form of micro insurance is credit life sold to borrowers of MFI s Limited benefit to the poor person; it protects the lender Strong demand for protection from the poor Increasing interest in the market from insurers Issue is how to cost effectively provide access, education and claims servicing

6 Insert Title Framework for Microinsurance Here

7 Introducing MicroEnsure Started working on microinsurance in 2002 within Opportunity International MicroEnsure established in 2006 as worlds first insurance broker for the poor Currently serving 2,540,000 lives globally; life, health and weather index Gates Foundation grant; $25m over 5 years

8 MicroEnsure growth 2,500,000 Growth in Lives Insured 2,000,000 1,500,000 1,000, ,000 0

9 Filling the gaps in the market Started as a consultant within a banking group doing banc assurance for simple life products. Wanted to serve a larger market with a wider range of products. Established as a broker quick, cheap and able to be paid. Realized that the products we needed were not always available which led us to run a cell captive. When we introduced health we realized there are no TPA s dealing with this segment (outside India). When we struggled to gain traction with MFI s we targeted cell phones and affinity groups.

10 Life Insurance 1. Credit Life - Protects the Lender - Borrower dies or is disabled during a loan period. The credit life pays off the outstanding loan plus interest to the lender. 2. Term Life - Excellent for Funerals - Normally loan linked and can provide a fixed sum insured upon death of borrower, spouse, children or parents. 3. Life Products Sold Through Savings Accounts - Microfinance deposit taking institutions can sell insurance to depositors in order to make deposit accounts more attractive 4. Investment Products - Provides a Saving Return - Return of premium plus interest upon maturity - can be problematic collect the premium over a five year term.

11 Saturnina Santocildes, Iloilo A 57 year old widow fought for her children Took 15 loans from MFI the last was for $177 She died after extracting her tooth The $2,000 was split between the children: The youngest remain at school, the oldest started a business; one bought a cow

12 Property Insurance Products Provides for damage or destruction of buildings and belongings Can often be combined with basic life insurance products Has proved popular for market vendors Can be extended to include cover for political violence

13 Weather Index Products Demand from small hold farmers for inputs Rural banks and MFI s worried about risk Need to mitigate climatic risk but traditional insurance has issues; claims payment slow and expensive Solution is weather index products: - Quick and transparent claims trigger - Index available for a range of risks

14 Malawi Weather Index Insurance Joint World Bank / MicroEnsure project Zero credit available in 2004 to farmers Developed ground nut, maize, tobacco etc Loans for as little as $100 per acre increase yields by more than 100% Products launched in Rwanda, Tanzania, India and the Philippines in 2009

15 Impact of Weather Index Insurance

16 Indian Micro-Health Product Provides $500 cover for a family of four Service provided on a cashless basis In-patient only cover Costs $8 per year with weekly payments Pre-existing and maternity from day-one Within two years serving >500k people

17 Tanzanian Health Insurance No local capacity had to build Started by working out what people wanted to spend and built a product People did not trust insurers, they trusted the church! Product sold via Anglican Church and Coffee Growers Unions

18 Conclusions The poor want to mitigate risk Credit life is easy to get into their hands, but it has limited impact Poor want; health, life, property / weather Needs to be a partnership model, banks are not the only point of sale Back office is key in reducing transactional cost and providing good service

19 Thank you for your attention For more information please visit: