MR Microinsurance_2012_03_29.indd - International Labour ...

508 Delivery channels and intermediaries
Table 23.1 Key diff erences between insurance and microinsurance intermediation
Key activity Traditional intermediary Microinsurance intermediary
Sales knowledge
Strong understanding of traditional insurance
Clear understanding of the needs and
required
products and the needs and demands of the
demands of the low-income market as well as
middle- and upper-income markets.
an understanding of what is required to get
them to buy insurance.
Market demand Demand is generally gauged passively in
Market research of varying intensities per- per- per-
study
response to clients’ direct requests.
formed to understand demand, which is often
latent.
Marketing and Typically, brochures and basic presentations are
Typically requires innovative approaches such
education
suffi cient for a market that already understands
as comic books, microinsurance microinsurance “classes”, role
insurance.
playing/acting and and generally marketing with with a
focus on consumer education. education.
Product Since most basic products are well known and
Since the products are typically completely
development development understood, product development from scratch
new to a market and underlying data are
rarely takes place; even new products tend to
scarce, there is a need for product reformula-
benefi t from a wealth of underlying data, which
tion, pilot testing and signifi cant monitoring
can be used for pricing and policy design.
to ensure product success.
Training Training delivery
Direct sales are common; when retail “delivery
Signifi cant training and supervision of typi- typi- typi-
channel channel staff staff channels” (typically licensed agents or brokers)
cally unlicensed and inexperienced delivery
are used, very little training is required.
channel staff .
Back-offi ce ce Managing moderate volumes with traditional
Managing large volumes of very small trans- trans- trans-
management
systems; gathering a signifi cant depth of infor-
actions; gathering limited information for
mation for each policy.
each policy.
Claims Follow process with signifi cant controls, gener- gener-
High transaction volumes, rapid processing
ally slow claims payment; limited volumes.
and payment required; limited controls.
Cash handling Traditionally managing and aggregating cash
Managing premium collection and claim
transactions between insured and insurer
disbursement through organizations that
through payroll deduction or other simple
may require individual transactions with
transactions from corporate entities.
their clients and may not commonly aggre-
gate fi nancial transactions.
23.1.4 Conventional intermediaries and microinsurance
Despite these signifi cant diff erences between conventional and microinsurance
intermediation, some traditional brokers and agents have made forays into the
low-income market. In fact, the World Federation of Insurance Intermediaries
(WFII), which represents agents and brokers from over 100 national associations,
had expressed concern that those promoting microinsurance wanted restrictions
lifted to legally allow unlicensed agents to sell microinsurance, so in 2010 the WFII
produced a policy paper on microinsurance (see Box 23.1). Th e Federation criticized
the lack of regulatory control over microinsurance intermediaries and looked to
promote the importance of a professional, regulated market. Th e paper suggested
that there is no reason to treat microinsurance any diff erently from insurance.