Microinsurance is Exciting
By Claude Penland, Associate of the
Casualty Actuarial Society
• Microinsurance is generally designed for
low-income businesses and individuals who
aren’t typically covered by traditional
• It is usually sold at low premiums and low
coverage limits / caps.
• Some insurance analysts have said that
microinsurance is an untapped market for
emerging economies, especially in India,
Bangladesh, China, the Philippines and
many parts of Africa.
• Latin America should also see growth.
• In fact, microinsurance has a possible
customer base of around 4 billion people.
• Interestingly, 200-300 years ago, sickness
benefit societies, friendly societies and
fraternal insurance plans were implemented
in the United States and in Europe.
• These plans were essentially
• Swiss Re reports that the microinsurance market
has an eventual potential annual premium of up to
• Credit life is presently a leading microinsurance
• Going forward, some expect other insurance
products that are found to be necessary in the
developed world – for example, health and
property insurance – to develop a microinsurance
following as well.
• Barriers to microinsurance growth include
inadequate local regulation.
• Actuaries can find it difficult to price products
with a lack of appropriate actuarial risk and
• Insurance product distribution, claims handling
and underdeveloped microfinance sectors are also
high hurdles to jump.
• And, finally, cultural acceptance and education
can be significant barriers.
• Some insurers and governments are considering
private-public partnerships to help develop the
• Reinsurance broker Guy Carpenter has even
recommended microinsurance to reinsurers as a
growing market where they could devote some
• It is indeed an exciting time to consider the
• Thank you!