Models

There are five major models of insurance coverage for the poor:

a) The “Partner-Agent” model

In this model, the MFI would have the function of a dealing agent, thus enabling the insurer to reach a market where it would not intervene directly on its own because of the lack of profitability. 
From a client perspective, clients can access an insurance product which is managed by a professional and thus benefit from a better “return on investment” than with an informal means of insurance. 

This model is based on the collaboration between a partner agency (usually a formal insurance company) and a dealing agent that provides services to low-income clients.  The company (the partner) feeds the financial resources, sets the premiums, monitors the insurance claims and ensures that legal obligations are observed.  The agent ensures that the risks, resources and knowledge are transferred and shared rationally between the formal and informal sectors. 

b) The mutualised insurance and other community-based organisations model

Credit and savings cooperatives often offer borrower's insurance contracts that cover the balance of a loan to be paid back. Moreover, they offer savings in the form of life insurance, to stimulate saving habits. Some also sell Housing, Funeral, Invalidity and Disease insurance, and even Accident policies, yet more rarely.  These products come in addition to mainstream credit and savings services. 

In the countries of Sub-Saharan Africa, many mutualised health insurances have also been created on the basis of a voluntary membership.  In exchange for the premiums they send to a fund, policyholders are entitled to certain benefits.  The community has an important role in designing and managing the programme. 

c) The “all-in-one insurance” model

Different organisations - MFIs, insurance companies, etc. – can also sell their policies directly to the poor through agents who are paid on a salary or sales commissions basis, or both.  India’s Tata AIG or Bangladesh’s Delta-Life develop microinsurance using this model of direct sale.

d) The “franchise” model

In this model, the professional insurer franchises his/her license, assigning part of his/her capital to the licensee through a reinsurance treaty, as the case may be; the licensee (an MFI, generally), on his part, is in charge of designing the product, setting the prices as well as handling the losses and gains. 

d) The “supplier” model

This model applies to health insurance specifically, it implies that the insurer provides all or part of the health-care services. His/her interest is that he/she remains in control of the health care offer which is a crucial element for client faithfulness.