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The following Microinsurance in Focus notes are based on chapters of the book Protecting the Poor: A Microinsurance Compendium. The objective of these notes is to make the compendium's content more accessible.

Nr. 1: Marketing: Promoting insurance to the poor
Many people, rich or poor, are reluctant to buy insurance because they do not want to think about loss, illness or death. Indeed, regardless of the economic status of the target market, the old adage “insurance is sold, not bought” holds true.

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Nr. 2: Product design and insurance risk management
Upon entering the low-income market, insurers should first establish the need and demand for insurance, determine the risks that can be insured, and devise insurance risk management processes for ensuring the product’s viability.

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Nr. 3: Premium collection: Minimizing transaction costs and maximizing customer service
The low-income market that microinsurers target presents its own unique challenges to collecting premiums. Primary premium collection mechanisms used by mainstream insurers such as salary deductions from employers or debit orders from bank accounts are often not an option.

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Nr. 4: Strategies for sustainability
The sustainability dilemma comes down to a trade-off between three competing objectives for a real value product: Coverage, operating and transaction costs for the insurer and the product’s affordability.

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Nr. 5 : Organizational development in microinsurance
To achieve objectives, a microinsurance provider needs to be creative in training and rewarding workers. This note examines five aspects of organizational development: Organizational structure, recruitment, training, compensation, and institutional culture.

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Nr.6 : Loss prevention and control
Loss prevention, loss minimization and loss control are often used interchangeably. Loss prevention involves initiatives to avoid the occurrence of risk, especially insured events. Loss minimization strives to reduce the impact of risks when they do occur. Together, these two activities amount to loss control.

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Nr. 7 : Recommendations for commercial insurers
Low-income households could potentially become an exciting and modestly profitable new niche for commercial insurers. However, the poor represent a unique target market that requires a different approach.

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Nr. 8: Microinsurance: What can donors do?
In most countries, reaching scale and providing real value to clients is likely to require donor involvement in the medium term. Donors will need appropriate expertise and resources to engage effectively in microinsurance because it is relatively new, complex, and risky.

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Nr. 9: Claims processing: Some general comments
Without efficient and effective claims processing, it will be impossible to offer affordable real value products to low‐income households since their settlement is when the insurers can fulfill their promises and prove to the insured that they are trustworthy.

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Nr. 10: Role of governments
Governments can facilitate, among others, market development by promoting microinsurance through a variety of mechanisms, including the creation of an enabling environment, education and social marketing, and the provision of financial assistance.

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Nr. 11: Mutuals, cooperatives and community-based insurers
The mutual model embodies the social and commercial dimensions of microinsurance.  A mutual is a company or association that is owned and governed by its members. Policyholders share the returns and possibly the risks of the scheme.

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Nr. 12: Providing insurance of real value to the poor

This final Microinsurance in Focus Note has been written by Ellis Wohlner and concludes the series with reminding us that microinsurance is at the end of the day about providing real value to the poor.

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Type: Notes