Microinsurance at the Microfinance Research Conference
Karlijn Morsink, from the University of Twente, went for the Microinsurance Network to the Second European Research Conference on Microfinance, organised by the Academic Research Action Group of the European Microfinance Platform (e-MFP). In this short Challenges and Topics, she explains what researchers have said about microinsurance.
‘Savings and Insurance’ is the answer to the Andhra Pradesh microfinance crisis at the ‘Second European Research Conference on Microfinance’ which was held from 16 – 18 June 2011 in Groningen, The Netherlands. The conference was organised and hosted by the University of Groningen, a member of the Action Group.
The conference’s strong focus on the importance of complementing microcredit with additional financial mechanisms such as savings and insurance was already evident in Robert Lensink’s introductory presentation. This was followed by Paul Mosley’s general overview of the state of the art in microinsurance research. Theoretical puzzles and empirical opportunities related to factors explaining the take up of microinsurance such as risk aversion, trust and peer effects were the subject of Jan Willem Gunning’s presentation. A microfinance conference with a first plenary session heavily loaded with microinsurance research: A promising start!
In the afternoon there was a special panel of the Microinsurance Network and the ILO's Microinsurance Innovation Facility: “Microinsurance: What do we know and what still needs to be researched?” The session was chaired by Michal Matul of the Facility.
Daniel Clarke of Oxford University gave a presentation on the supply of index insurance and expected demand given actually fair prices, basis risk and degrees of risk aversion. Karlijn Morsink of the University of Twente presented an on-going systematic literature review of microinsurance demand studies.
Key points are that studies focus mainly on product and marketing characteristics, risk aversion and household characteristics. Next focus in research on microinsurance demand should be on the influence of context factors.
Impact and research
Finally, Ralf Radermacher of the Micro Insurance Academy presented a systematic literature review on microinsurance impact research. Current impact studies focus on health microinsurance and impact on out-of-pocket payments. A trend towards more experimental research designs in microinsurance impact research can be observed. The main conclusions are that there is a need for standardized impact research approaches and outcome indicators which should be applied to a variety of microinsurance schemes.
During the special paper sessions a broad array of innovative microinsurance research was presented. Daniel Clarke presented a paper demonstrating that demand for index insurance increases if poor households become wealthier and decreases if these households are more risk averse. His study also shows that relatively low levels of demand for index insurance are consistent with demand which can be expected based on normative economic decision making theories.
Thilo Klein of the University of Cambridge presented a health insurance choice experiment with which he explains why low income people prefer private providers, such as MFIs, over public ones. Wendy Janssens of the Free University of Amsterdam presented an experimental study design aimed at trying to understand preferences of individuals for voluntary group or voluntary individual health insurance for MFIs. Karlijn Morsink presented a study which concludes that a typhoon re-housing insurance significantly reduced the chance that low income households use stressful coping strategies such as selling productive assets and therefore reduces the chance that these households are set back below the poverty line.
In my opinion, although most conference participants were new to the field of microinsurance, the abundance of quality papers and presentations shows that microinsurance research is becoming well-established in the microfinance research field.
Research and the Network
The annual International Microinsurance Conference, organised by the Munich Re Foundation and the Microinsurance Network, includes an academic track in collaboration with the Center for the Economic Analysis of Risk (CEAR). This provides an important platform for researchers to have in-depth discussions and present their work to donors, policymakers, NGOs, insurers and other stakeholders.
As more and more researchers join the Network, a session on academic research was held at the June Member Meeting 2011. One of the outcomes might be the set up of an academic working group looking at microinsurance specific issues.
More information about the conference
Conference abstracts and papers