The microinsurance sector’s new horizons

Thursday, November 12, 2015
The 11th International Microinsurance Conference drew to a close November 5, in Casablanca, Morocco, after three days of important debates on the business case for microinsurance, and lessons learned in driving growth and securing long term sector sustainability. Some 350 microinsurance experts from over 50 countries were in attendance.
 
Microinsurance, as an important part of financial inclusion, has become globally recognised through decision outcomes at the G7, G20, B20 and APEC meetings, and there is a sense that the sector is being understood and incorporated at higher levels of policy. 

The microinsurance conference was an official event of the Financial Inclusion 2020 week, an initiative by the Center for Financial Inclusion which aims to build a movement that mobilizes stakeholders to achieve full global inclusion using the year 2020 as a focal point to galvanize action. Through the conference, the Munich Re Foundation and Microinsurance Network provided a space for practitioners, researchers, insurers, and policymakers to explore together how to advance the use of insurance as a risk management tool in developing countries.
 
“We were delighted to hold this year’s conference in Morocco”, says Dirk Reinhard, chairman of the Conference Steering Committee and vice chairman at the Munich Re Foundation, “as it represents a gateway to the MENA region and the Arabic and Francophone speaking African countries. 

 
Key takeaways
 
“The conference in Casablanca was characterised by constructive and forward-looking debates, particularly on the topics of the business case, distribution, the role of government and regulation, agriculture and catastrophic risks, health insurance, client education, data availability, and market research” underlines Michael J. McCord, chairman of the Microinsurance Network.
 
The business case continues to be pivotal in pushing the sector forward and attracting new players to the microinsurance space. What is encouraging is that, within the African market, it is clear that there is already a strong business case with profits across the region nearing 30%. One of the key lessons learned emerging from the conference is that growth and profitability are complementary and that scale is essential for the long terms sustainability of the sector. Within the African region total insurance premium are in the order of USD 647 million, with only 1% dedicated to microinsurance, showing the huge opportunity that remains in the region.
 
To bring microinsurance to scale, distribution is currently one of the most debated topics within the sector. Digitalisation is absolutely critical in order to service at scale. Particular emphasis was placed on partnerships with mobile network operators (MNOs), but the sector also needs to look beyond MNOs. From case studies, it is clear that there is a continued role for agents on the ground helping to ensure client value and retention. Partnerships with distributors also constitute an opportunity for insurers to benefit from the distributors brand to gain trust with their target audience.

With regards to data, the sector should seek to go further in sourcing data as this is often already available but not used. On the other hand, even when not all data is available, companies are encouraged to go ahead but should make sure systems are put in place to track important indicators as the business goes along.
 
To the regulators, representing 27 countries at the conference, the message which was brought forward is that they have an important role to play in balancing consumer protection and market development, whilst ensuring they are not slowing down the process. Output-based regulation rather than ...

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