MR Microinsurance_2012_03_29.indd - International Labour ...

Microinsurance intermediaries
from economies of scale, mitigate underwriting diffi culties and help in risk management.
Microinsurance intermediaries covered in this chapter share many characteristics
of MGAs in developed markets because of their specifi c focus, their ability
to serve as aggregators of policies from many underlying sources and their positioning
in the microinsurance supply chain, which is one step removed from the ultimate
consumer (see Figure 23.1). Unlike wholesalers however, microinsurance intermediaries
do not distribute their products through traditional retail agents that have
been formed for the explicit and exclusive function of insurance distribution.
Figure 23.1 Product delivery supply chain
Reinsurers
Reinsurance
intermediaries
Intermediaries
Insurers Delivery channels Microinsured,
low-income
population
23.1.2 Delivery channels
Microinsurance largely depends on the eff orts of delivery channels. Delivery channels
typically have direct and regular access to poor consumers and work with
insurers to distribute microinsurance products to them. While some insurance
companies work with their own captive agents to reach the poor directly, such
arrangements are uncommon. A more frequent approach is the partner-agent
model, whereby insurers work with delivery channels to sell products to their clients.
Products are thus delivered by the fi eld staff of an NGO, credit offi cers of an MFI,
cashiers at a retail outlet, or church offi cials where microinsurance is off ered. It is
expected that the delivery channel will act as an intermediary, representing its clients,
identifying appropriate products, sourcing the insurer and servicing the client.
In practice, however, many delivery channels have not fulfi lled this broader
function eff ectively. Th eir insurance skills are often limited and their motivation
confused. Th eir aim is either to provide value for their clients or to maximize the
growth of their balance sheets. Th us, there could be a place for broker intervention
in microinsurance to bring together insurers and delivery channels, if the broker:
– has a greater interest in providing quality and value to low-income markets than
current delivery channels;
– is skilled at working with the low-income market;
– can provide comprehensive back-offi ce services; and
– can do all this at a more competitive price than insurers selling directly.
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