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Microinsurance in Brazil, Colombia, Mexico, and Peru

Iravantchi; Sheirin, Mark D. Wenner, Inter-American Development Bank, June 2012

The microinsurance market in Latin America is still in its embryonic phase. The purpose of this technical note is to better inform donors, national governments, and insurance companies interested in promoting financial inclusion about how they can accelerate the development of microinsurance markets.

Four countries -Brazil, Colombia, Mexico, and Peru- are reviewed to glean lessons learned about paths taken to develop these markets and the interaction of key stakeholders.

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Evaluation of the first year results: Fonkoze’s Kore W natural catastrophe insurance for Haitian micro-entrepreneurs

Fonkoze, June 2012

In 2011, Fonkoze, in partnership with its insurance company MiCRO, introduced Kore W - an innovative new product to protect Haitian microloan clients from the devastating effects of natural disasters. Through the cancellation of loan balances and disbursement of emergency payouts, Kore W helps clients recover quickly after being impacted by floods, hurricanes, high winds, landslides, or earthquakes. 100% of Fonkoze’s microcredit clients pay a small premium for their coverage which amounts to roughly 55% of the cost of the product to Fonkoze.

Now one year since its launch, Fonkoze has commissioned this report to examine how the product performed, what impact the product had on Fonkoze and its clients, how clients perceive the product, and what changes should be made as Kore W enters its second year.

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Weather indices for designing microinsurance products for small-holder farmers in the tropics

Díaz Nieto;Jacqueline, Myles Fisher, Simon Cook, Peter Läderach, Mark Lundy, International Centre for Tropical Agriculture, 2012

Agriculture is inherently risky. Drought is a particularly troublesome hazard that has a documented adverse impact on agricultural development. A long history of decision-support tools have been developed to try and help farmers or policy makers manage risk.

This article offer site-specific drought insurance methodology as a significant addition to this process. Drought insurance works by encapsulating the best available scientific estimate of drought probability and severity at a site within a single number- the insurance premium, which is offered by insurers to insurable parties in a transparent risk-sharing agreement. The proposed method is demonstrated in a case study for dry beans in Nicaragua.

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Emerging practices in mobile microinsurance

Téllez; Camillo, Mobile money for the unbanked, 2012

This paper outlines opportunities for leveraging the mobile channel, including mobile money, to deliver microinsurance. It also provides a global landscape of attempts to do so from around the world and develops new ideas for collaboration between stakeholders from the mobile and the insurance industry.

The statement of this paper is that the mobile platform, including mobile money, can be used as a tool to reduce the costs of microinsurance and to help it to scale. Assets controlled by mobile network operators (MNOs) can help insurers reach customers in low-premium environments. MNOs have large physical and virtual networks that can reach significant numbers of clients, including the unbanked, at low cost.

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MILK Discussion Note n°3: Counting lives covered – Getting it right

Koven; Richard and Michael J. McCord, MILK Discussion Note n°3, MicroInsurance Centre, June 2012

The Microinsurance Learning and Knowledge (MILK) Project released Discussion Note n°3 which syntheses the MILK’s approach for counting policies and covered lives. Indeed, keeping an accurate count of covered lives is important for measuring the scale and impact of a microinsurance program, and different approaches can lead to drastically different counts. Documenting covered lives and policy counts is also important because these counts form the basis of two key indicators that are used to evaluate insurance programs: revenue per life (or policy) and expenses per life (or policy).

The microinsurance industry does not currently have a consistent approach to counting lives covered, and inaccurate or inconsistent reporting creates a multitude of potential problems. In this discussion note, MILK proposes an approach to counting policies and covered lives, for use with all types of products (life, non-life, and health). Your feedback on the suggested approach is very welcomed.

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ICMIF's Prosper n°10: Sowing the seeds of mutual protection

Ed. Pattel; Sabir and Marine Guais, ICMIF Microinsurance, June 2012

The Issue 10 of Prosper, ICMIF Microinsurance development magazine, is available. The issue gathers a wide range of stories from ICMIF's members around the world, demonstrating an innovative and socially responsible movement. New products are regularly being introduced, including, amongst others, ones originating in El Salvador, Algeria, India and Cameroon; highlighting how mutuals are continually striving to satisfy their members’ needs.

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Microinsurance decisions: Evidence from Ethiopia

Clarke; Daniel and Gautam Kalani, ILO's Microinsurance Innovation Facility, Research Paper n°19, May 2012

This study reviews evidence collected from a microinsurance field experiment in rural Ethiopia. The experiment involves collecting data from individuals in order to predict the shape of the demand curve for indexed insurance.

The study finds that the relationship between demand for index insurance and wealth levels is none linear and that individuals with intermediate levels of wealth have the highest demand while the richest and the poorest exhibited much lower demand. This observed demand curve is then compared with demand curves that have been generated using different economic theories regarding how people make economic decisions.

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Health mutuals' impact on behaviours for demand of health insurance in Cameroun

Colbert Awomo Ndongo; Jean and Roger Tsafack Nanfosso, ILO's Microinsurance Innovation Facility, Research paper nº20, May 2012

This study examines the impact of micro health insurance on the demand for health care based on a representative survey of 317 households in the Health District in Mbalmayo central region in Cameroon.

Authors show that evaluated schemes are plagued by adverse selection, which questions the impact of the membership in health mutuals on health care utilization.

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Selling more, selling better: a microinsurance sales force development study

Guarnaschelli; Serena, Gill Cassar, Aparna Dalal, ILO, Microinsurance Paper n°16, May 2012

Selling microinsurance is not easy; convincing low-income clients of the value of insurance is difficult. The challenge is compounded when sellers have no previous insurance experience or have other responsibilities in addition to selling insurance. Adequate training, incentives, and monitoring of the sales force are indispensable for selling microinsurance effectively, and ultimately extending insurance care to millions of vulnerable households. A properly trained and motivated sales force is needed to reach scale, and cost-efficient sales methods can enable microinsurance programmes to be viable. 

The objective of this study is to recommend strategies and tools to microinsurance providers on how to improve the performance of their sales force. This report reviews sales force development methods and processes related to recruitment, training, incentives, and monitoring. The study profiles recommended practices through in-depth case studies, and references useful tools.

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Client-value of microinsurance products: evidence from the mutual assistance fund in Vietnam

Son Hong; Nghiem and An Hoai Duong, ILO, Research Paper N°18, May 2012

The microinsurance industry is relatively new in Vietnam and little research has been conducted on this industry. This study is one of the first that examines whether current insurance products provided by the Mutual Assistance Fund (MAF), Vietnam’s first microinsurance provider, satisfy their client’s needs.

The study investigates preferences of clients for microinsurance products with the case study of the MAF and aims to contribute to improve the ability of the young microinsurance industry in Vietnam to meet the needs of its clients, which in turn, will enhance its efficiency, effectiveness and sustainability. In addition, the study examines the factors influencing microinsurance take up and identifies potential gateways for microinsurance to serve the uninsured poor population.

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Managing microinsurance partnerships

Rendek; Kelly, ILO, Microinsurance Paper n°15, April 2012

"Good" partnerships have been identified as one of the key factors in the success of a microinsurance programme. Insurers, reluctant to employ the direct sales model in a microinsurance context, need to form partnerships with organisations that can serve as distribution channels. Given cost pressures and the need to reach scale in microinsurance, these partnerships are crucial to the success of the programme. The number of multi-stakeholder partnerships in microinsurance is also growing, as governments and donors become active players. These partnerships are particularly difficult to manage as partners have distinct (sometimes conflicting) priorities and very different organisational cultures.

This note aims to analyse microinsurance partnerships and identify key themes based on the experiences of various organisations. It provides a framework with which to analyse both new and existing partnerships, and provides recommendations and strategies to monitor and improve them.

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Microinsurance in Fiji: An evaluation of demand for insurance

Tayag; Joe, Pacific Financial Inclusion Programme (PFIP) and the Asian Development Bank (ADB), March 2012

As of 2010, the Reserve Bank of Fiji reports that only 88,085 life insurance policies were in force covering an estimated 9% of the population. Non-life insurance products such as personal accident insurance, health, and motor vehicle insurance only covered a small fraction of the population. This leaves approximately 800,000 uninsured Fijians vulnerable to unexpected financial expenditures related to deaths, health emergencies, and crop failures. This report evaluates the demand for microinsurance among the members of four potential distribution partners based in Fiji: Partners in Community Development Fiji (PCDF), the Catholic Church of Fiji, the Fiji Muslim League, and Then India Sanmarga Ikya Sangam (TISI Sangam).

The study shows that demand for new insurance products does exist and provides proof of significant opportunities for insurance growth.

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MILK Brief n°10 - Doing the Math - Property Insurance in Ghana

MILK Brief N°10, MicroInsurance Centre, 2012

In January 2012 the MILK Project designed a Client Math study in partnership with MicroEnsure-Ghana and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). The study is centred on the role of the insurance coverage in how insured entrepreneurs coped with this shock, and thus explores the value of this type of coverage.

The MILK’s Client Math methodology is implemented to better understand the financial tools available to and used by those with and without insurance, and to conduct a quantitative assessment of the plausible gains of having insurance.

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