The 39th AIO Conference highlights challenges and opportunities of micro-takaful and microinsurance in Africa
This Day Life, 30 May 2012
In May 2012, the 39th African Insurance Organisation (AIO) conference, held in Sudan, brought together insurance practitioners from Africa, Australia, Europe, Middle East and Asia to discuss the challenges and opportunities of micro-takaful and microinsurance in Africa.
According to operators, the greatest threats to a microinsurance programme is the default on the part of beneficiaries of the scheme, followed by the absence of an effective risk management tool, which can effectively eliminate fraud and other risks in the system. Other serious challenges are the absence of reinsurance capacity for microinsurance, the absence of credit information in the market and moral hazards, which pose great danger to the system.
Despite the challenges, operators see many prospects for microinsurance and takaful insurance across the continent. It could benefit to the economy when added to the expansion of the microfinance infrastructure. Microinsurance can serve as a guarantee for loans for finance providers, while policyholders can benefit from loss prevention services put in place by service providers and share in the surpluses recorded at the end of the accounting period. However, for micro-takaful insurance to be effective, governors and central banks need to get involved by regulating and acting to avoid over-indebtedness.
ADIE seeks a Microinsurance Development Officer
The French Association for the Right to Economic Initiative (ADIE) is looking for a Microinsurance Development Officer, who will be in charge of the microinsurance sector's follow-up, the organisation of capacity building workshops in microinsurance for ADIE's folks, and the development of the microinsurance programme, including ADIE’s strategy for the years to come.
The candidate has at least 3 years of professional experience in product development and marketing strategy, he is also a French speaker. The job is based at ADIE’s headquarters in Paris, and will involve regular travels across France.
More information (in French only)
First microinsurance scheme in the Fiji
The first-ever microinsurance scheme in the Fiji has been launched by the Life Insurance Corporation of India (LICI) and the Partners in Community Development Fiji (PCDF), after a group of community facilitators provided trainings on the scheme in some villages. Members of the PCDF who have been trained will be able to access a low-cost insurance product to cover for their lives, accidents and funeral expenses. This product was designed with the aim of helping rural-dwellers with their social obligations, as they encounter a lot of financial problems especially when they come across accidents and deaths.
This is a pilot scheme and it's not only the first of its kind in Fiji but also in the Pacific Islands. The cost is about 15 USD per annum for an individual on a cover of 1,000 USD. If successful in the province where the pilot is being tested, the scheme will be extended to other parts of the country.
The Jet online, 17 May 2012
The Fiji Times Online, 23 May 2012
Microinsurance for empowering women
Insurance Daily, 16 May 2012
The rise and growth of microinsurance in developing parts of the world can play a central role in the empowerment of women, according to Mark Byrne, founder and chairman of investment vehicle Haverford. Upwards of 80% of all microinsurance products have so far been distributed in favour of the male population in the developing world, but Mark Byrne said developing and promoting products specifically tailored for women could play a prominent part in strengthening the role of women in some of these societies.
According to Byrne, microcredit has already changed the lives of between 150 million to one billion people around the world. But microinsurance is only getting started, as it has the potential to help some three billion people.
As he explained, helping women get a stronger foothold in developing parts of the world is one example of how insurance can assist society: “Being able to offer a woman who wants to start a cloth co-operative or a roadside shop insurance to do that will have an enormous impact in the third world over the next generation.”
NAICOM condemns Nigerians insurers' foreign drive
Microfinance Nigeria, 17 May 2012
National Insurance Commission of Nigeria, NAICOM, has condemned the expansion drive of the country’s insurance companies in foreign countries at the expense of the nation’s untapped market such as microinsurance. The commission was particularly peeved by those companies that cannot boast of 10 offices in Nigeria but have offices in other countries such as Rwanda, Ghana, Gambia, Cameroon and Uganda, among others.
This frustration was expressed by Daniel Fola, Commissioner for Insurance, at the inaugural meeting of the diagnostic study of microinsurance, conducted by German’s Deutsche Gasellschaft fur Internationele Zusam-menarbeit (GIZ) and Access to Insurance Initiative (A2ii) in Abuja. With a 24 months’ timeline, GIZ will undertake this research study with the aim of developing and marketing microinsurance for Nigerian insurance market, noting that 80% of the population live in rural areas and that insurance companies need to reach them first.
New directions for microinsurance in India
In May 2012, the national Conference "Financial inclusion: integrating insurance into total package" was held in India. Chairman of Insurance Regulatory and Development Authority (IRDA) J. Hari Narayan approached different topics, aiming to make microinsurance more effective in rural areas.
The regulator first re-thought the definition of microinsurance, focusing on premiums, coverage amounts and distribution channels. He said that, at present, a microinsurance product is defined by the benefit it pays out, which should be less than 50,000 INR, and by its distribution channels, which are insurers and brokers, non-governmental organisations, self-help groups and MFIs. However, he expressed major concerns over MFIs delivering microinsurance in combination with microloans as he found out that in several cases, MFIs tend to charge a very high rate for microinsurance services. For him, microinsurance products should not be bundled products.
He also released a white paper in which microinsurance is established as an important tool for financial inclusion. But, to be effective and demand-driven, he said that insurance companies need to improve both their products and post-sale services, as the paper revealed gaps in post-sales services and lower acceptance of claims in rural areas. “The experience hitherto has been that, with notable exceptions, claim experience on microinsurance products has not been of the same level as it is for normal insurance products, even if covering similar risks. We need to examine the implications of it further and only then will we be in a position to come up with regulatory intervention”.
Calling upon insurance companies to address those gaps, Chairman J. Hari Narayan made two proposals to the Life Insurance Council. First, he asked the council to examine the feasibility of introducing a lead insurer model, with two to three insurance companies assigned to a specific region to design, develop and distribute microinsurance products. This scheme has previously proven good results when applied to banks. He then asked to study the feasibility of introducing a single microinsurance product that combines elements of life, non-life and health insurance. “The idea is that there should be a single product designed to deliver multi benefits and cover multiple risks. This single product will also help reduce costs and make distribution more efficient”, he said.
The Hindu, 15 May 2012
The Wall Street Journal, 16 May 2012
The Micro Insurance Egypt project presents...
Youtube, 4 May 2012
The Micro Insurance Egypt project (MIE) released a video on microinsurance in Egypt as part of its efforts to reach a sustainable access to inclusive finance for the millions of Egyptians who earn less than two dollars a day. MIE's goal is to provide easy access to simple, affordable and viable financial products and services in order to offer more protection and sustainability to the most vulnerable people in Egyptian society.
The video presents farmers lives in Egypt and their need for insurance services in their daily life. It also describes what is needed in order for microinsurance to reach the next level.
HRH Princess Máxima of the Netherlands, Special UN Advocate for Inclusive Finance, features in this video and illustrates her willingness to contribute to the development of the sector.
Microinsurance lessons for rural banks in Ghana
Business & Financial Times, 27 April 2012
Star Micro-insurance Services and the Association of Rural Banks (ARB-Ghana) teamed up for an educational training course for rural banks on the benefits of microinsurance to their clients and themselves. The 3-days workshop gathered executives of 54 rural banks, six savings and loans companies and other microfinance institutions and was a unique occasion for the microfinance sector to understand the advantages that microinsurance can offer. In Ghana, most people take loans but the tendency to default is very high. Hence, taking credit life policy would protect these institutions against such situations.
Clients - basically rural folks and farmers- also need to be educated to take a policy that will protect them from harmful events, like weather failure. This is even more important as most Ghanaians have very little trust in the insurance sector.
Rural banks are strategically positioned in the microfinance sector in Ghana because they have build a relationship with them. Therefore, they have a role to play in bringing on board more of the low-income people to benefit from micro-insurance.
Micro health insurance launched in Bangladesh
Microdinero, 27 April 2012
The Institute of Microfinance (InM), a non-profit organisation in Bangladesh, has launched a micro health insurance plan pilot servicing nearly 3,000 households in Churkhai and Mymensingh. The new health care program will have its trial run over the next two years and will offer two plans with varied coverage.
InM initiated this healthcare plan after a study revealed a 3% annual increase in poverty due to out-of-pocket medical costs. Between 1997 and 2007, total health expenditures increased from 9.3 USD to 15 USD, the majority of which was private. "A majority of patients first seek informal providers like pharmacies, quacks and all incur large medical expenses while in many cases, they failed to receive the appropriate care," said Prof Syed M. Ahsan, team leader of InM’s Microinsurance Research Unit.
Despite slow progress, Ahsan believes that micro health insurance schemes have great potential as a healthcare financing option in Bangladesh and abroad.
A business model for healthcare providers in India
Business Outlook, May 2012
Narayana Hrudayalaya, Vaatsalya and Vision Spring, three healthcare providers, have hit on a business model that effectively marries social goals with commercial imperatives. All three players aim to provide people at the bottom of the pyramid with affordable, accessible healthcare, with an accent on preventive healthcare. To do so, they developed a business strategy which focuses on several parameters such as value offering, operational strategy to enable value creation, customer interface strategy to enable customer relationships, delivery network and, finally, financial strategy.
Insurance protection for cotton farmers in Tanzania
The Citizen Reporter, 4 May 2012
The Tanzania Cotton Board (TCB) and Tanzania Gatsby Trust have signed a deal to provide insurance to cotton farmers to cushion them from weather conditions such as drought. The deal, which will be implementation next year, will protect against vulnerabilities resulting from unpredictable weather changes.
Micro Ensure hired by Gatsby Trust, is conducting a survey in Bunda District. If the system becomes successful in the district, then it would be extended to other cotton growing districts.