MR Microinsurance_2012_03_29.indd - International Labour ...

106 Emerging issues
donors (Geneva Association, 2009). 3 The combination of these efforts is likely to
increase the outreach and ensure a high level of participation, thereby improving
the viability and impact of microinsurance schemes.
4.4.2 Insurers, product developers
The regional impact of global warming varies considerably. In some places,
torrential rain and flash floods are occurring more often. In others, heat waves or
droughts are becoming more intense and lasting longer. National weather services
and international bodies like the World Meteorological Organization can usually
provide information on climate changes in specific regions of the world. Product
developers and insurers must get an accurate picture of how the changes may
affect weather events and atmospheric conditions.
In this respect, as many historic events as possible should be compiled and
analysed, in consultation with weather or climate experts, to assess the risk. In
the wake of global warming, risk loadings are to be expected. As with climate data,
the periods analysed should never be less than 10 years, with a 30-year analysis
being regarded as scientifically sound. Positive effects, such as the probability of
less frost, should also be taken into account in the planning, although in product
development it is the negative effects that are likely to predominate.
4.4.3 Reinsurers
The role of reinsurance for microinsurance covering catastrophic risks is not much
different from the regular insurance market. It is prudent for microinsurers to
take catastrophe reinsurance if it is affordable and available. Reinsurance reduces
volatility and can be a prerequisite for profitability, particularly in the context of
climate change (Munich Re Foundation, 2011). For example:
– Reinsurance stabilizes the financial conditions of the insurer especially when rare
events such as natural disasters occur.
– It meets regulatory capital requirements or even plays a role as a capital source for
companies with limited means.
– It provides additional professional services to insurers such as technical assistance,
training or support in the product development phase.
When it comes to microinsurance and natural disasters the last of these
three points has become increasingly important, since reinsurers have good
3 In addtion to providing insurance, insurers may offer other related services. For example, agricultural experts
working in insurance and reinsurance companies may have a better understandig of the big picuture than an
individual farmer, and can suggest a change of crops to reduce risk and make insurance more affordable.