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Arthur D. Little: Making Microinsurance Sustainable and Profitable
Bussiness Wire, 27 August 2009
As the world grapples with global economic recession, no one is left more vulnerable to unexpected accident, illness or disaster than the four billion people living on less than US$2 per day. According to a new report released today by global management consultancy Arthur D. Little, offering microinsurance to this large and disparate market is one way for downturn-hit financial services companies to develop a new profit stream while regaining customers’ trust and working toward a more responsible and sustainable world.
In “Emerging Markets in Microinsurance,” Arthur D. Little argues that despite potential barriers such as distribution and developing a profitable product at such a low-margin, insurers entering this largely unexplored market can succeed by developing a bespoke strategy and product offering suited to the specific needs of the low-income consumer:
- Simplify products – lowering associated labour costs while maintaining quality without high overhead
- Offer in-kind benefits (funeral service, groceries) rather than lump cash sums
- Engage in public-private partnerships to improve local infrastructure and quality of life for consumers
- Partner with microfinance companies to offer bundled services
- Ensure applications and claims forms are simplified and accessible to consumers
- Use technology (mobile point-of-sale devices, smart cards) to overcome distribution challenges
Download full report
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