Call for revisit of microinsurance strategy in India
Asia Insurance Review, Vol I Issue 106, 26 July 2010
Insurance players in India are calling for more thinking on microinsurance strategies in the country so as to attempt to increase microinsurance penetration among the poor, which currently stands at 2% of the adult population, according to a report in the Financial Express.
The industry also needs to address vast regional disparities in the spread of microinsurance. Mr Tilak Mukhopadhyay of the Chennai-based Centre for Insurance and Risk Management notes that research indicates that three quarters of microinsurance schemes operate in four southern states of India-Andhra Pradesh (27%), Tamil Nadu (23%), Karnataka (17%) and Kerala (8%). He says that there is lack of basic data such as health, weather and longevity. This makes it difficult for insurers to design an actuarial model for microinsurance products.
Players in the insurance industry believe that there seem to be more challenges than incentives for them to provide microinsurance. They cite a list of issues such as capital requirements and commission rates that need to be reviewed to promote microinsurance. There are other challenges in India as well. "Current regulations require a minimum capital of Rs1 billion (US$21.3 million) to establish an insurance company. It acts as a significant barrier for smaller entities like us," said Mr Chatterjee Roth of the Vimo Sewa insurance programme set up by a self-employed women's association, adding that in most other countries the minimum capital required is a million or two.
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ACCION International’s Frontier Investments Group looking into microinsurance
Microfinance Focus, 19 July 2010
In a Microfinance Focus interview, Frontier Investments' managing director Monica Brand talks about investment interests in emerging markets like housing and microinsurance.
ACCION International’s Frontier Investments Group is a double bottom line, venture equity fund focused on catalyzing a new approach to microfinance. It invests in new technologies and disruptive business models that can powerfully enhance the way financial services are delivered to the poor.
Mrs Brand says that they are especially interested in the payment system sector and are looking at companies which have a mobile technology, mainly in India.
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Fiji wants to support microinsurance pilots
Fiji Times Online, 19 July 2010
The Reserve Bank of Fiji (RBF) is eager to promote the development of microinsurance services in Fiji and will support pilot projects. Its governor Sada Reddy said the power of microinsurance to increase people's financial security and fortify their level of social protection warranted informational exchange on the issue.
"Because of this phenomenon, the RBF has reviewed the Insurance Act of 1998 to ensure that there are no restrictions hindering the introduction of this product here in Fiji," Mr Reddy said.
Mr Reddy made these comments at a gathering of insurance and banking executives, and other financial stakeholders at the RBF last week to discuss issues of financial inclusion on the topic 'Information exchange on microinsurance'.
"From the CEOs of insurance companies, to rural cooperatives of farmers, everyone here has a part to play in the development of this field, which will help create a more stable and secure Fiji," he said.
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Ethics in Business: Interview with Felipe Botero, MetLife
Carnegie Council, 30 June 2010
Felipe Botero is a vice president at MetLife Insurance. Day-to-day, he develops insurance for retiring baby-boomers. But he is also taking on the enormous responsibility of putting together microinsurance products for MetLife in the developing world.
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The interview is also available as audio file
China: Microinsurance sector has vitality
Asia Insurance Review, 13 July 2010
Microinsurance schemes for the rural poor collected premiums exceeding 270 million Yuan ($39.9 million) between September 2008 when the first rural microinsurance policy was sold in China and the end of 2009, reports China Insurance News citing Mr Chen Wenhui, the assistant to the chairman of the China Insurance Regulatory Commission (CIRC).
Speaking at a microinsurance seminar last week, Mr Chen also said that the total sum insured was around 170 billion Yuan ($25 billion) and covered 11.1 million people at the end of 2009. Last year, more than 8.71 million people joined the rural microinsurance schemes, he said. A lot remains to be done given that there are more than 700 million people residing in the countryside.
He noted that the microinsurance sector possessed vitality, with the pilot schemes introduced in the country having withstood initial trials, and that their expansion last year had enjoyed good results.
China's microinsurance sector is dominated by China Life Insurance which sold the country's first microinsurance policy in Shanxi Province in September 2008. Other insurers which have entered the market include China Pacific Insurance, Taikang Life Insurance and New China Life Insurance.
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India's IRDA launches consumer protection regulation
MicroCapital.org, 12 July 2010
The Insurance Regulatory and Development Authority (IRDA), India’s insurance regulator, recently announced several draft insurance regulations, with the aim of reducing "unfair practices" and closing an "information gap," according to A. Giridhar, executive director of IRDA. The regulation is proposed primarily in response to improper sales practices of unit-linked life insurance products to a mainly financially illiterate market in India. Unit-linked life insurance is a form of life insurance which is purchased in units, the price of which is based on the net asset value of an investment fund.
The proposed regulations include:
- An amendment of IRDA regulations to protect policyholders’ interests and require enhanced disclosure of insurance product characteristics;
- Guidelines for telephone and internet marketing due to the complex nature of insurance products;
- Standardisation of terms and conditions on unit-linked insurance products.
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African insurers target microinsurance to deepen insurance penetration
Daily Independent Niger, 29 June 2010
African insurance companies have been charged to develop microinsurance products to cater to the poor and vulnerable people, who constitute the majority of the population of the continent. This formed part of the resolutions adopted at the 37th annual conference and general assembly of the African Insurance Organisation (AIO) in Banjul, The Gambia recently.
The insurance operators were, however, counselled that microinsurance products demand innovativeness in both product design and channels of distribution and premium collection.
The meeting also resolved that some critical factors to the survival, growth and continuous development of the African insurance industry are the effective and efficient management of the human and financial resources.
To this end, insurance companies were advised to take urgent steps to put in place human resource management policies that will ensure the recruitment of the right calibre of personnel and their continuous training and professional development supported by attractive remuneration and other incentive packages that will ensure retention and high level performance and loyalty.
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FINO launches a new microinsurance solution in India
Financial Information Network & Operations Ltd., 4 July 2010
Financial Information Network & Operations Ltd. (FINO), an organisation based in India with the single objective of building technologies to enable financial institutions to serve the under-served and unbanked sector, has launched FINO-Sure, a microinsurance solution that can enables insurance companies to reach out to the low-income customers and serve their needs, while maintaining financial viability.
FINO’s microinsurance product rides on the existing and proven network of Smart Card holders, who can access other financial services from the same card. FINO solutions will enable the routing of life, health and weather insurance products and services to the low-income populations, thereby providing them with the much-needed "assurance" to carry out their day-to-day activities.
FINO-Sure is the middle layer, or delivery channel, between the insurance company and end-customer, providing the geographical coverage, scalable technology platform and processing capabilities for insurance business.
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Insurance included in G20 Financial Inclusion Principle
G20 Summit Document, 27 June 2010
This year's G-20 Summit in Toronto focused on recovery from the global economic and financial crisis and the implementation of commitments from previous G-20 summits, while laying the foundation for sustainable and balanced growth.
The G20 leaders have developed a set of nine "Principles for Innovative Financial Inclusion" that will support efforts to accelerate the delivery of financial services to the poor using innovative approaches. The Diversity principle, which is the second one, mentions insurance to be part of a broad range of affordable services.
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The full report (Innovative Financial Inclusion, May 2010) by the Access through Innovation Sub-Group is available to download on Microfinance Gateway
Rules for fund handling by terminated microinsurance schemes in the Philippines
Business Wold, 28 June 2010
Nongovernment organisations (NGOs) and cooperatives running informal microinsurance schemes that have been ordered shut down by the government will have to use members’ contributions to pay for the premiums of new insurance plans.
A Joint Memorandum Circular No. 2 of the Insurance Commission (IC), Cooperative Development Authority (CDA) and the Securities and Exchange Commission (SEC), which has yet to be released, provides the rules on how funds collected by NGOs and cooperatives must be used once their in-house microinsurance schemes are terminated.
Under the joint memorandum circular, funds collected by entities with informal microinsurance schemes that will formalise their activities -- either by partnering with licensed insurance companies or setting up their own insurance companies -- shall be used to pay for the premiums or fees of insurance or “insurance-like” products.
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