MR Microinsurance_2012_03_29.indd - International Labour ...

Microinsurance intermediaries
Similarly to traditional business, a microinsurer may call in a broker to
structure a reinsurance deal and eff ectively bridge the knowledge gap between
insurers and reinsurers. One such intermediary, Guy Carpenter, set up a special
unit in 2008, GC Micro Risk Solutions, to facilitate the transfer of various
types of microinsurance risk to the international reinsurance market on a
commercial basis. Th e unit’s commercial micro-reinsurance transactions to date
include aggregate stop-loss (a type of excess-of-loss cover) and quota share
(a form of pro rata reinsurance) for several coinsurers involved in a large
government-sponsored critical illness programme in India, a life quota share
for a start-up microinsurer in Southern Africa and an index-based catastrophe
programme ultimately benefi ting an MFI based in Haiti (see Box 4.5).
Figure 23.3 Various reinsurance cover structures
Excess of loss
Coverage limit
Retention
Provides vertical protection
for a covered risk or portfolio in
excess of a stated dollar amount
per occurrence or in the aggregate
Pro rata
Coverage limit
Retention
Provides horizontal protection
for a covered risk or portfolio
from the ground up
Index-based
Index payout
As with primary intermediaries, Guy Carpenter is often required to develop
a market. Th is means supporting microinsurance projects before they can be
reinsured with product development services, or setting up partnerships with
primary insurers. GC Micro Risk Solutions believes that delivery channels,
broadly defi ned as any organization with an existing or potential fi nancial
relationship with the poor, will increasingly require such services if they are to
move into more complex and risky lines of microinsurance such as agriculture,
health and property. Simultaneously, many primary insurers will quickly reach
their limits in respect of product know-how and risk management, making
access to reinsurance capital and expertise increasingly important for expansion.
519
Provides binary protection
for a reference risk or portfolio
determinable by an objective
measurement criteria
(e.g. inches of rain per season)