MR Microinsurance_2012_03_29.indd - International Labour ...

Teaching elephants to dance
working with external sponsors and distribution partners requires that systems
and operations respond fl exibly to diff erent partner requirements.
Box 19.7 Microinsurance in multinational insurance companies
Multinational companies off er specifi c opportunities and challenges for micro- micro-
insurance. Th eir fi nancial strength and resources can allow strategic investments
into longer-term opportunities and their strong international brands can provide
motivation for more speculative investments to produce the social benefi ts or
research for the public good. Additionally, their presence in many countries can
help to transfer product and system innovations proven in one setting to others.
Microinsurance experts based at head offi ce can contribute to building the global
knowledge base, exercise thought leadership, and be a contact point for public or
civil society organizations.
On the downside, multinational insurers have plenty of competing priorities,
especially in emerging markets. Th ey have also achieved suffi cient scale to break
processes down into functional departments – gaining a comparative advantage
and risk management benefi t, but creating barriers to agile adaptation. In com-
panies fractured by product lines, functions (underwriting, claims, sales, IT) and
geography, any initiative that aims to serve a new customer will have to either
simultaneously coordinate all the elements of the company (in essence, have
proxy authority of the CEO) or, more reasonably, change its ambition, or split
off , as Christensen (2003) recommends.
Working within the system will bring the budding microinsurance “intra- “intra-
preneur” no end of interesting learning about his or her company. For example,
one South African insurer intended to recruit a three-person team to run a
microinsurance fi eld offi ce. In the insurer’s HR system, the lowest possible salary
was hard-coded at level zero. For the microinsurance business model to work, the
plan was to pay salaries at less than half of the level zero. As a result, the company
could not hire the staff directly without changing the company’s entire compensa-
tion plan – an obvious non-starter. Instead, the three staff were recruited using an
outside agency, reducing their connection to the company and increasing cost.
Th e emerging experiences of multinational insurance companies that are
developing sizable microinsurance portfolios around the world show that it is
profi table. To achieve this, and to develop their microinsurance activities activities system-
atically, many global insurers have established special teams or or units to to advance
the topic. topic. Some of these teams play a coordinating role in promoting microinsur-
ance, setting quality standards and managing global global public relations and media
activities. Other companies have a more active approach, with group-level
employees employees that manage local pilots, product development and the acquisition of
new distribution partners.
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