MR Microinsurance_2012_03_29.indd - International Labour ...

Is microinsurance a profitable business for insurance companies?
non-life markets. Insurance penetration in the country is low at 1.2 per cent and
has remained relatively stable over the past few years. Few insurance companies
in Guatemala have ventured into microinsurance, with only three showing significant
activity. Competition is therefore limited.
Aseguradora Rural (ASR) is a small insurer, established in 1999 to operate in
both the life and the non-life markets. It is wholly owned by BANRURAL, a
large local bank focused on extending financial services to the rural population.
ASR’s strategy is aligned with that of BANRURAL, with a focus on providing
insurance to the rural market. The insurer has launched four microinsurance
products to date and this business has experienced significant growth since its
inception accounting for 28 per cent of ASR’s total gross premiums in 2009. The
microinsurance business is administered under the traditional insurance operational
structures within ASR. There is, however, a team allocated to managing
the relationship between ASR and BANRURAL’s agency network, which currently
distributes all of ASR’s microinsurance products.
This study considers a life product and a health policy for students. The life
product constituted approximately 90 per cent of ASR’s total microinsurance
gross premiums in 2009. It was ASR’s first microinsurance product, providing
life, funeral and disability cover. A range of annual premium and benefit levels
are available to choose from, with different plans available for the 15 to 50 age
group and the 51 to 64 age group. To purchase a policy, the client needs to be a
BANRURAL accountholder, though it is not compulsory for BANRURAL’s customers
to purchase the product.
ASR’s student policy provides a death and disability benefit for principal
members and a health benefit for financially dependent minors. The product
benefits include:
– for minors, healthcare services provided by ASR’s partner healthcare network
Empresa Promotora de Servicios de Salud (EPSS) or reimbursement of health
expenses in a different healthcare centre in the event of an accident, ambulance
service in the event of an accident, daily payment for hospitalization in the event
of an accident or disease, and medical assistance 24 hours a day.
– for the parent, cover in the event of death deriving from a natural or accidental
cause and cover in the event of permanent and total disability.
A range of premium and benefit levels for both components are available. As
with the life product, policyholders are required to have an account with BAN-
RURAL, although the product is not compulsory for all accountholders. ASR
spends a significant amount of time managing BANRURAL’s role in the distribution
of the product, and motivating the bank’s agents to sell the product has
posed a challenge.
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