MR Microinsurance_2012_03_29.indd - International Labour ...

Current trends in microinsurance
the underlying assumptions that lead insurers to invest in microinsurance.
Market-entry decisions are substantially infl uenced by the demonstration eff ect,
which appears to be enhanced by several factors:
– witnessing other insurers, especially competitors, active in microinsurance and
not wanting to be left behind;
– increasing availability of microinsurance information, especially tips and lessons
learned, widely disseminated through electronic media; and
– participation in a growing number of microinsurance conferences and meetings.
Th e impact of this demonstration eff ect on commercial insurers is a powerful
trend. When the fi rst volume of Protecting the poor was published, if insurers
were not in the market to satisfy regulatory requirements, then they were
involved primarily for CSR reasons. Th ey wanted to show that they were doing
something good for society, and microinsurance was a logical CSR endeavour
because of its proximity to their core business. Th ey were often not particularly
focused on profi tability, though many hoped this would be an eventual outcome.
Figure 1.2 Insurer motivations for entering microinsurance
Weighted frequency
40 39
35
30
25
20
15
10
5
0
Enter
a new market
27
Financial
profi t
expectations
Source: Coydon and Molitor, 2011.
23
Corporate
social
responsibility
Image/brand
recognition
Expand
to new
countries
Th e companies were asked to prioritize by ranking three objectives by order of relevance.
Th e top ranked objective was given 3 points, followed by 2, then 1
Required by
legislation/
supervisors
Others
Th e entry of more insurers into this market has shifted the social versus commercial
equation to a more balanced approach, which should be more sustainable.
A spokesperson for Allianz, for example, notes the importance of both the
21
16
8
3
21