MILK Brief n°14: The business case for life microinsurance in the Philippines: Initial findings
Koven; Richard and Michael J. McCord, MicroInsurance Centre, September 2012
Life microinsurance has grown quickly and is well established throughout the Philippines, and as a result, the business case is widely assumed to be strong. The MILK project is working to test the accuracy of this assumption. The analysis focuses on a cluster of five programs that represent the broad range of life microinsurance activity in the Philippines: CARD, TSPI, Prudential, CLIMBS, and MicroEnsure.
Life microinsurance is among the simplest types of microinsurance in terms of product design. It is also a product line for which the business case is often seen as the clearest. Still, auhtors find unexpected complexity on both fronts. Seemingly “simple” products have coverage that is in fact quite complex, and the seemingly “clear” business case can be ambiguous. This brief presents initial findings; authors are continuing to explore these issues and hope to answer more of the open questions over the next year.
The social dilemma of microinsurance: A framed field experiment on free-riding and coordination in microcredit groups
Janssens; Wendy, Berber Kramer, ILO, Microinsurance paper n°22
This paper analyses free-riding and coordination problems in microinsurance. Authors model demand for health insurance in microcredit groups that typically share risk through joint liability as a social dilemma. Less risk averse clients are tempted to free-ride and forgo individual insurance while the more risk averse face a coordination problem. Group insurance binds both types to the social optimum.
Microinsurance games played with microcredit clients in Tanzania confirm the free-riding hypothesis and demonstrate limited coordination failures under individual insurance. Group insurance increases demand in the games. These findings provide a potential solution for low uptake of microinsurance.