My three aspirations for microinsurance - Opinion of Véronique Faber
2011 has been an exciting year for microinsurance. Several insurance companies and co-operatives have realised the potential of microinsurance and are today among the most active stakeholders in this field. This interest has created many opportunities for the delivery of good value insurance services but the key challenge of "making microinsurance work" still remains at large.
The question of how to offer insurance services that provide an added value to a high number of people with limited assets is at the heart of this key challenge. Credit life insurance is still the most widespread product although demand studies highlight the importance to provide cover for health and asset related issues. It is not for lack of trying though. Health and property microinsurance are just very complex products, and require work on many different levels over a long period of time.
Since 2002, the Microinsurance Network is a global multi-stakeholder platform with members, who are convinced that they can only provide or promote good value microinsurance by exchanging experiences and lessons learnt with the objective to work out a common knowledge framework. The major strength of the Network is that we don't push only one approach or one particular ideology. Different models and products are perceived as means to provide clients with a good risk management solution: they are not the end and need to be adapted to the context.
I work for the secretariat for several years now and value this objectivity highly. However, I would like to take a break from my usual neutral role and share with you my hopes and aspirations for microinsurance in 2012!
This is my Top Three Aspirations:
1. Comprehensive services: Microinsurance "Plus" activities
Although microinsurance has outgrown its original microfinance context, there are still lessons to be learned from this field. Microfinance Plus is a way to contribute in a broader way to development and is based on the insight that financial services for low-income people on their own do not create the desired impact. They need to be embedded in the context of a comprehensive risk management strategy and/or linked to other activities, e.g. literacy courses or business development services.
Insurance education is important and the Network's Insurance Education Working Group has done important research on its practices. However, all too often insurance education is only seen as one way to promote insurance as a risk management concept and not as a continuous effort to stabilise or increase the livelihood of the client.
A recent article in the Guardian about how burial insurance is blown completely on increasingly lavish funerals in Soweto (source) portrays a funeral parlour manager, who tries to convince people to use payouts more carefully. This is a great example of what support providers could offer to their clients. I am not suggesting that microinsurance should change socio-cultural contexts, but if we are serious about responsible insurance, we need to prepare its clients to become responsible clients.
2. Capacity Building: Development of meso-level centres
As there are many different types of microinsurance providers, it is difficult to establish meso-level structures that provide training, bundle resources, conduct research and advocate on a national level. However, insurance skills and capacity is a serious concern. Insurance associations and cooperative networks exist but they are representatives of a specific stakeholder type.
The Regulation, Supervision and Policy Working Groups and its offspring, the Access to Insurance Initiative hosted by GIZ, are advocating globally for adapted microinsurance policies in collaboration with the IAIS (International Association of Insurance Supervisors). The Capacity Building Working Group works on establishing training contents based on capacity development gaps.
However, these efforts, as fruitful as they are, will be lengthy due to a lack of local "anchorage". For example, the provision of a broad training curriculum will be slow as it can only take the form of a workshop here and there. These local "anchors" should also conduct relevant research and represent the interests of local microinsurance stakeholders, formal and informal, while ensuring the focus on the clients. The exceptions to the rule, India and the Philippines, give evidence for the accelerated impact through meso-level structures looking at research information available and changes on policy and capacity levels.
3. Good practices: Guidelines for accountable public-private-partnerships
Ongoing geopolitical changes, which are currently redrawing the balance of power, and concerns about donor effectiveness have brought about a paradigm change in how developed countries approach development aid. Traditional aid has shifted to a more private sector approach that builds on long-term investment and collaboration.
Brazil overtook the UK as sixth-largest economy (source), the Jasmin revolution has repercussions far beyond its national contexts and the 160 policymakers and donors at the Fourth High Level Forum on Aid Effectiveness, which was held last November in South Korea, confirmed that they want to work together for "BetterAid" but they could not agree on binding commitments (source).
The leverage of outreach achieved by public organisations partnering with private businesses is very promising. The combination of complimentary competences with more market-driven public aid interventions are more than compelling in today's economy. Public-private-partnerships (PPPs), especially with regard to health, open the door for more sustainable development aid.
Nonetheless, the failure in global water privatisation efforts to provide better water at lower costs, and other examples of inferior service delivery have raised concerns over the benefits of PPPs. The Network has already addressed the topic of PPPs by exchanging experiences and asking questions (paper by Gaby Ramm, source and workshop in Rio, source), however, I do think we need to further work out a set of guidelines to make sure PPPs live up to their promise.
This is my personal aspiration list and it, of course, in no way represents a general opinion of the Network and its members.
What are your three aspirations for microinsurance in 2012?
With this, I wish you a happy 10th anniversary!
Véronique Faber
Secretariat coordinator, Microinsurance Network |
