MR Microinsurance_2012_03_29.indd - International Labour ...

Is microinsurance a profi table business for insurance companies?
Table 18.4 Premium volumes and covered lives
Insurer Product Gross written premiums (US$’000) Covered lives
2009 2008 2007 2009 2008 2007
CIC, Kenya Bima ya Jamii1 CIC, Kenya Bima ya Jamii 142 137 27 18 872 17 461 3 625
1 142 137 27 18 872 17 461 3 625
ICICI
Lombard,
India
Old Mutual,
South Africa
ASR,
Guatemala
Malayan,
Philippines
Credit life2 Credit life 3 919 2 356 2 196 256 762 170 725 159 047
2 3 919 2 356 2 196 256 762 170 725 159 047
MAS health insurance 1 323 1 008 539 550 194 511 456 318 334
Weather insurance 20 490 4 637 1 383 259 958 108 819 43 278
Group funeral n.a. 3 Group funeral n.a. 400 000 to
450 000
3 400 000 to
450 000
400 000 to
450 000
500 000 to
600 000
Life cover 4 789 2 603 2 143 123 429 75 004 42 184
Student cover 175 36 20 554 3 984
Microinsurance
business
1 913 1 246 815 5 009 089 4 334 887 4 113 975
1 Th e low policy volumes for ASR’s student cover and Bima ya Jamii are partly explained by the fact
that these products are relatively new, having been launched in 2008 and 2007 respectively.
2 Compulsory products bundled with credit.
3 Old Mutual was unable to disclose premium volumes as this would constitute competitively sensitive
information for the insurer.
Although the case studies show a substantial number of covered lives, microinsurance
premiums are relatively small compared to premium volumes for traditional
business (at 3 per cent or less for all the initiatives except CIC’s credit life and
ASR’s life cover). 1 Microinsurance product lines will need to expand signifi cantly
before they make a tangible impact on the business of the insurer as a whole.
Growth in credit life for CIC and the life product for ASR has enabled these
products to make up a signifi cant proportion of the gross premium volumes of
the life business of these insurers (25 per cent and 37 per cent respectively in
2009). At ASR, the growth in the microinsurance business exceeded the expectations
of the insurer. ASR attributed the boost in sales to a new commercial direction
strategy and the establishment of a department in charge of the relationship
with the distribution channel. ASR developed and implemented a new marketing
and promotion methodology and an incentive system to focus on the microinsurance
initiatives.
For several schemes viability depends on continued growth. Old Mutual’s
policy volumes are not high enough to cover distribution costs. ICICI Lombard’s
health product has not gained suffi cient penetration within groups to counter
anti-selection. ICICI’s weather insurance product has not attained the geographical
spread needed to enable the insurer to retain more of the premiums and rely
less on reinsurance.
1 Th is information is not available for Malayan.
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