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					Microinsurance is Exciting

By Claude Penland, Associate of the
       Casualty Actuarial Society
       www.InsTrends.com
                 What?
• Microinsurance is generally designed for
  low-income businesses and individuals who
  aren’t typically covered by traditional
  insurance.
• It is usually sold at low premiums and low
  coverage limits / caps.
                  Who?
• 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.
                 When?
• 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
  microinsurance, too.
                     Why?
• Swiss Re reports that the microinsurance market
  has an eventual potential annual premium of up to
  $40 billion.
• Credit life is presently a leading microinsurance
  product.
• 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.
                     How?
• Barriers to microinsurance growth include
  inadequate local regulation.
• Actuaries can find it difficult to price products
  with a lack of appropriate actuarial risk and
  exposure data.
• 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.
                  Wrap Up
• Some insurers and governments are considering
  private-public partnerships to help develop the
  microinsurance sector.
• Reinsurance broker Guy Carpenter has even
  recommended microinsurance to reinsurers as a
  growing market where they could devote some
  excess capital.
• It is indeed an exciting time to consider the
  microinsurance market.
• Thank you!

				
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posted:2/17/2011
language:English
pages:7