MR Microinsurance_2012_03_29.indd - International Labour ...

Formalizing the informal insurance inherent in migration
Risk-taking entities have a presence in both the home and the host country in
the Hybrid model. Th is model is able to insure both the migrant in the host country
and the migrant’s family in the home country more easily than either the Home
or Host model. Although the Hybrid model has many advantages, to date few
insurers have attempted to serve the low-income market using such an approach.
Table 17.1 General characteristics of the 3H models
Model Insured Mitigates risk for: Need for an intermediary Leverages remittances
Insurer is in the
migrant’s Host
country
Insurer is in in the
migrant’s migrant’s Home
country
Hybrid: Hybrid: insurer is
in both the host
and home country
Migrant Migrant and migrant’s
family (depending on
product)
Migrant’s family
(most likely) or
migrant (prior to
departure)
Migrant and/or
migrant’s family
Migrant (indirectly)
and migrant’s family
(directly)
Migrant and/or
migrant’s family
Possibly for marketing
purposes
Defi nitely if targeting
migrants; possibly if tar-
geting migrant’s family
Unlikely
Very possible
Possibly for marketing or Possible
money transfers
17.3 Legal and regulatory challenges
Legal and regulatory restrictions pose one of the most signifi cant constraints to
selling insurance to migrants and their families across borders as insurers are generally
not licensed in both the home and host country. Th e constraints vary
depending on the host and home country, whether the migrant and/or family
members in the home country are benefi ciaries of the policies, and the location
of the insurance company. Th ese constraints are often under-researched or
underestimated, yet are one of the main factors preventing the launch of programmes.
Th is section provides an overview of the types of regulations aff ecting
migration-linked microinsurance products.
Choice of law. Th e fi rst challenge in any cross-border transaction is to determine
which jurisdiction’s law applies. For migration-linked products, where
insurance is sold by a foreign company and/or some or all benefi ciaries are
located abroad, it may not be clear which country’s insurance law should apply.
In general, parties can choose the law that governs a contract between them, but
the issue is largely untested in respect of cross-border insurance sales.
Scope of regulation. Regardless of which country’s law applies to the insurance
contract itself, the parties must comply with the insurance laws of all countries in
which they conduct activities. Insurance is typically governed at a national level by
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