MR Microinsurance_2012_03_29.indd - International Labour ...

Formalizing the informal insurance inherent in migration
Most studies have found that the bulk of remittances are used for consumption,
basic household needs (Orozco, 2003; Alvarez Tinajero, 2009; Asfar, 2003;
de Bruyn and Wets, 2006) and health care (Amuedo-Dorantes et al., 2007).
Migrants’ families typically make the spending decisions. 2 However, when the
preferences of migrants and their families on how to spend remittances diverge,
the migrant may wish to have greater control over how funds are spent. Studies
have also found that if given full control over how remittances are spent,
migrants would spend money differently, allocating less to daily consumption
and more to savings (Ashraf et al., 2010).
A study on formal funeral insurance in South Africa indicates that convincing
migrants’ families that it is sensible to spend remittances on insurance may be
difficult, even when their income levels are sufficient (Crayen et al., 2010).
Migrants, on the other hand, may have an interest in purchasing insurance for
their families to protect their loved ones as the migrants are the ones who often
pay the bills in a crisis. A study conducted by SegurCaixa, an insurance company
providing insurance to migrants in Spain, found that migrants would like cover
for themselves when visiting their home country as well as cover for their family
members. A survey of Haitian migrants in the Turks & Caicos, conducted by
AIC, a Haitian insurance company, also found that migrants were interested in
transferring some risks and responsibility for their families back home to more
formal channels. 3 Similarly, in focus groups with Guatemalan and El Salvadorian
migrants, the Microfinance International Corporation (MFIC) found that they
were interested in cover for their families, although less interested in protecting
themselves, with the exception of repatriation and accident insurance.
Demand by migrants or their families for microinsurance is likely to vary
depending on income level, degree of assimilation, documentation and other
factors. SegurCaixa’s study finds a strong correlation between income, assimilation
and insurance demand. Take-up among immigrants was concentrated
among those with higher incomes and those who had been in the host country
longer. Magnoni et al. (2010) also showed that insurance take-up was more likely
among Mexican immigrants in New York City who had been in the United
States longer, as well as those with higher incomes, those who were married and
those that had a bank account.
Transnational families face many unique risks. Therefore, in addition to the
standard range of products that might be attractive to the migrant’s family in the
home country, there is a need to develop insurance specifically tailored to the
2 Alvarez Tinajero (2009) found that in only 5 per cent of cases did the migrant decide how remittance
funds would be spent and only in 12 per cent of cases was it a joint decision by the migrant and the
head of the household receiving the remittance.
3 Interview with Isabelle Depeche, Head of Microinsurance, AIC.
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