Insurers turn to microinsurance to increase revenue in Kenya
Business Daily Africa, 27 April 2010
This article examines how and why microinsurance is on the increase in Kenya.
Insurance companies are fast embracing the low-end market as they seek new avenues for profits in an industry that has witnessed near stagnant growth.
The number of firms offering microinsurance has grown from a single firm in 2007 (CIC insurance) to six, including Old Mutual, Kenya Orient, British American, UAP and Apollo.
The penetration of insurance products has remained at a measly 2.5 per cent for nearly a decade because of low confidence in insurance products and lack of products targeted at the low and mid-end of the market.
“The formal insurance market is saturated and we are looking at microinsurance as an area that makes a profound impact on most of the population,” said James Wambugu, the CEO of UAP Insurance that recently launched microinsurance versions of livestock and crop insurance.
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New 'Microinsurance Stories' Blog
This blog has been created to share stories and anecdotes about microinsurance. The purpose is to make microinsurance more tangible to the people not working within the sector as it is still a fairly unknown concept, although gaining momentum every day.
The idea is to illustrate what it is, how it works and why it is important through some examples and live stories. The blog, which is run by Therese Sandmark who works for the Swedish Cooperative Centre and is based in Kenya, encourages microinsurance professionals to share their experiences.
Click here to visit blog
China's insurance market: First quarter
Insurance News Net, 21 April 2010
China's insurance industry saw a 40% year-on-year growth in premiums for the first quarter, as the China Insurance Regulatory Commission (CIRC) moves to implement further structural improvements to the market.
During the quarter, China saw "a rapid, with better quality" growth in the insurance industry, which realised total premium income of 454.14 billion yuan (US$66.43 billion), up 38.6% year-on-year, said CIRC Chairman Wu Dingfu in a statement.
The chairman said the domestic insurance sector needs more discipline and risk prevention, particularly in asset management risks, with risks coming from loose internal management control and solvency risk.
The CIRC will also consider stringent measures such as to taking control of or restructuring insurers that cannot improve their operations and cannot fulfill solvency requirements over a long period of time, Wu said.
Looking ahead, the CIRC said it will encourage insurers to develop telesales and internet sales; develop health insurance, pension insurance and rural microinsurance; actively participate in the pilot programmes for new rural pension insurance plans and to facilitate the development of rural individual insurance businesses.
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Partnership stimulates Haiti's long-term economic recovery
PR Newswire, 20 April 2010
Fonkoze, the largest microfinance institution in Haiti, today announced a partnership with The MasterCard Foundation and Mennonite Economic Development Associates (MEDA) to spur economic recovery. The $4.5 million grant from the foundation will restore Fonkoze's destroyed headquarters and enable its poorest clients to build new livelihoods. Overall, this program will benefit 70,000 clients.
Read full article or view video about the impact of this partnership on Haiti's economic recovery.
Microinsurance - Hope of the hopeless in Nigeria?
Insurance News Net, 20 April 2010
This article examines the current situation of microinsurance in Nigeria.
Insurance business is capital intensive as it requires huge start up costs and financial commitments, technology and a well educated and dedicated workforce. However, the monetary stability, opportunity for investments, political and economic stable environment and a sound consistent, favourable and fair regulatory system are not available in most developing countries.
Indeed, the perennial lack of interest in the informal sector to serve the poor is largely attributed to low collateral, higher transaction costs, interest rate restrictions, corruption, uncertain profitability, high risks, lack of pro-poor values and inability to serve the specific needs of the poor.
Financial experts are quick to point out that insurance is not as wide spread in developing countries as in the developed world and in the poorest nations. In other words it is virtually non-existent.
Despite the fact that Nigeria is considered to be one of the nations with the lowest insurance penetration rates at six per cent, available statistics show that Nigeria has a recognisable form of insurance market compared to the 35 countries adjudged as low in human development.
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Serving the 'unbanked' in the Philippines
Manila Bulletin, 18 April 2010
Filipinos who believe in the importance of life insurance were surely ecstatic at the recent passage of Republic Act 10001, which reduced taxes on insurance premiums and made it more affordable for them to invest in their future.
Life insurance, as most of us know, financially prepares policy holders and their families for eventualities such as illness and death.
However, this law would probably fail to resonate among the poor and marginalised, who could not afford to pay thousands of pesos in annual insurance premiums.
In this light, the Bangko Sentral ng Pilipinas (BSP) and the Insurance Commission (IC) have found what could be an answer to this predicament by making insurance readily available to the poor.
The BSP’s Monetary Board recently approved the marketing, sale and servicing of microinsurance products by rural, cooperative and thrift banks through BSP Circular No. 683. This is in line with BSP’s inclusive finance policy to provide services to the previously “unbanked” sector.
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Insurance penetration low in Pakistan
Pakistan Daily Time, 16 April 2010
The insurance penetration in Pakistan is miserably low, the Executive Director Insurance of the Securities and Exchange Commission of Pakistan (SECP) Nasreen Rashid said on Thursday. Nasreen Rashid said the need of the hour is to increase the insurance penetration in Pakistan. “Now our focus is the microinsurance for the people from lower income groups”, she remarked. She said steps would be taken for the promotion of the microinsurance in the country.
This, she pointed out, would be all-inclusive product would cover everything relevant, adding efforts would be made for the creation of enabling environment for the promotion of insurance in the country. She also highlighted the significance of the insurance but regretted that awareness in this connection is quite low in this very respect.
Whereas, Tariq Hussain and Farazuddin Amjad- both from the SECP Insurance Division, highlighted the vision which is aimed at promoting orderly development of a financially strong and transparent insurance, thereby increasing the insurance penetration in Pakistan. Arguably, in Pakistan, the insurance penetration is mere 0.7 percent of the GDP, which is believed to be the lowest in the region as well as in the world. The insurance industry remained ignored in the country for decades.
Source
Microinsurance is social business, says Yunus
Bloomberg, 12 April 2010
Muhammad Yunus, who won the Nobel Peace Prize in 2006 for his role in founding Bangladesh's Grameen Bank, talks with Bloomberg's Lizzie O'Leary about the company's micro health insurance programme and the importance of corporate and university partnerships. They speak at the World Health Care Congress in Washington.
Watch interview
Indian microinsurer Vimo SEWA to advise implementation of Namibian microinsurance system
MicroCapital, 15 April 2010
Vimo SEWA, an Indian insurance cooperative owned and run by women working in the informal sector, will be advising the implementation of a similar microinsurance program in Namibia. The effort is part of the Namibian government’s Vision 2030 initiative, a series of developmental policy goals enacted in 2004 to be achieved by the year 2030. As part of Vision 2030, the Namibian government has demonstrated commitment to other forms of social insurance by enacting monthly pensions to elderly and disabled citizens. Additionally, the Namibian government is funding Vimo SEWA during the advisory process.
While Vimo SEWA has yet to issue formal recommendations, Vimo SEWA chairperson Mirai Chatterjee stated that similarities between Namibia and India environment would simplify implementation. “There are some problems, like high number of HIV cases, alcoholism and scattered population,” she said. “But the model can be replicated there.”
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Central bank of the Philippines (BSP) issues 2009 Annual Report
Microcapital, 13 April 2010
Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, recently released its 2009 annual report highlighting developments in the Philippine economy and microfinance industry. The report stated that, as of 2009, there were 214 banks with microfinance operations with a total outstanding portfolio of PHP 6.4 billion (USD 143 million). Of these 214 banks, 52 were utilising mobile banking and more than half of the 90 million population had direct or indirect access to mobile phones.
The report also noted that in 2009 BSP approved new regulations governing housing microfinance and participated in the formulation of a framework for microinsurance.
Read article and BSP Annual Report 2009
Awareness gaps slowing microinsurance in Uganda
New Vision, 11 April 2010
The growth of the insurance industry is sidelining the microinsurance segment, a problem precipitated by low levels of awareness about the sub sector.
“Microinsurance is vital in the development of our insurance industry. But it is hindered by the existing awareness gaps,” Juliet Kyokunda, the regional marketing manager of MicroEnsure, said recently.
Edgar Muzahura, the country manager at MicroEnsure, said microinsurance is doing well in Tanzania, Malawi, Ghana and Kenya. “In Uganda, we are constrained by the low levels of appreciation, but we plan to step up our sensitisation campaign,” he said.
“We seek to serve the marginalised who live on $4 per day or less in developing countries and provide a safety net to reduce economic setbacks,” Muzahura added.
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Microinsurance and health care in Kenya
The Associated Press, 10 April 2010
This article, published on the CNBC website, looks into the general situation of health insurance in Kenya for the low income population.
Kenyan student Shadrack Silipo had a heart operation five years ago, the sort of surgery that often bankrupts families in Africa.
Silipo's parents normally would have paid by selling off land — the same green acres that form the inheritance for their eight children. But Silipo's father, a retired principal, had enrolled the family eight years ago in a microinsurance plan that covered the $5,000 operation in full.
Even as the U.S. debates how best to insure its people against sickness, a type of health care financing is growing more popular in Africa: Microinsurance. Activists say it can help pay for health care for some of the billions of people in the developing world who cannot afford it.
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Latest disaster in Brazil drives home the case for microinsurance
Business News Americas, 9 April 2010
As Brazil's insurance companies deal with the fallout of rainfalls that have caused flooding, mudslides, death and destruction, the fact that poor, underinsured areas look to be hardest hit drives home the need for microinsurance, Moody's analyst Rodolfo Nobrega said.
"It's too early to know the extent of the damage, but our guess is that it won't be very hard on the market overall," he said. Henrique Brandão, the head of Rio de Janeiro broker association Sincor-RJ, has put insured loss estimates at about 60mn reais (US$33.8mn).
Death tolls look to exceed 180 from the rains that have battered the state of Rio de Janeiro since April 5, effectively shutting down the country's second largest city at points. Brandão said he expected 8,000 vehicle claims, with as many as 1,500 totaled vehicles.
However, the problem of underinsurance among the worst damaged areas has already begun to emerge, Nobrega said.
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Bancassurance bane of small bank in the Philippines
Bussiness Mirror, 5 April 2010
The requirement under the law—or, as the industry jargon has it, bancassurance rules—to require banks who help sell insurance to have a minimum 5-percent stake in such insurance companies has been hampering smaller banks such as rural and thrift banks from participating and profiting from selling insurance to borrowers.
This has been a long-standing dissatisfaction among these banks, although they acknowledged it as protective of borrowers and lenders alike.
Now, Bangko Sentral ng Pilipinas Deputy Governor Nestor Espenilla Jr. said there appears to be a shift in the thinking of regulators for the law to be rewritten, such that while it maintains consumer protection, it at the same time extend to small lenders the opportunity to do microinsurance.
“We are already reviewing the cross-selling rules of which bancassurance is one. This is a work in progress. What the Monetary Board is prepared to do now is support microinsurance because it caters to a sensitive market that could benefit from insurance coverage,” he said.
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Namibia microinsurance policy forum launched
Namibia Economist, 1 April 2010
The Namibian minister of finance, Saara Kuugongelwa-Amadhila, on Monday officially opened the inaugural multi-stakeholder microinsurance policy forum that was co-hosted by the Namibia Financial Institutions Supervisory Authority (NAMFISA) in partnership with Financial Systems Development Services (FIDES). The objective of the forum was to explore local and global developments in microinsurance and how this will impact local policy, legal and regulatory frameworks for microinsurance development.
Speaking at the inaugural ceremony, Kuugongelwa-Amadhila said: “The long term Vision 2030 and the National Development Plan (NDP-3) is about our people and at the centre of our visioning exercise was a concern for the economic and social well-being of our people. The dynamics of our population and the associated social, economic, demographic, environmental and political factors are critical elements in visioning and determining strategic imperatives that would translate Vision 2030 into reality."
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Burial Societies call for skills development in South Africa
Insurance Times & Investment News, 26 March 2010
The Insurance Sector Education and Training Authority (INSETA) this week hosted its first ever Burial Society Indaba in Johannesburg - bringing burial societies together for the first time to discuss ways to organise, expand and improve the sector and its services.
"Research has shown that more than 20% of the South African adult population are members of a burial society, so the importance of this sector must not be underestimated. Burial societies also represent a significant spend with members prioritising 15% of their income towards this financial product, totaling R4.5 billion ($0.6 billion) rand per annum.
A new regulatory framework is also being developed to regulate the microinsurance market. Doubell Chamberlain of Cenfri/Finmark Trust, an organisation which has assisted Government with the proposed microfinance regulations that have been drafted, spoke positively about the new regulatory framework at the Indaba.
The proposed regulatory framework adopts: A product-based approach to reduce risk of microinsurance; Reduced entry and compliance requirements in line with lower risk (aiming to create space for smaller microinsurers, including mutuals and to create space for innovative intermediary models, including advice-based models); and Improved enforcement and recourse.
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