MR Microinsurance_2012_03_29.indd - International Labour ...

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24 The technology revolution in microinsurance
Anja Smith, Eric Gerelle, Michiel Berende and Grieve Chelwa
This chapter reflects the input and comments of Doubell Chamberlain (Cenfri). The authors also appreciate
the input and guidance received from Pranav Prashad (ILO) and Rupalee Ruchismita (CIRM).
The technology landscape in developing countries is changing at an incredible
pace. This provides a myriad of opportunities for financial-sector players wanting
to expand into previously unreached markets in these countries. This chapter
considers the role of technology in delivering microinsurance to low-income clients
across the world. While technology can be defined as any tool that assists in
delivering better services than available alternatives, this chapter specifically
reviews the role of information and communication technologies (ICT), mainly
electronic devices and associated software.
The first section takes a brief look at the benefits associated with technology,
while also paying attention to some of the risks that it entails. The next three sections
describe how technology can support different facets of microinsurance
processes: 1) client interfacing functions; 2) transaction processing; and 3) data
analysis. The last section takes a current and prospective look at mobile phones as
a unique category of technology in microinsurance.
24.1 Benefits and risks of technology in microinsurance
Technology has the potential to help meet several major challenges in microinsurance
provision, namely enhancing affordability, reaching clients, especially in
remote areas, collecting small premiums and paying valid claims. While addressing
these specific challenges, technology could potentially provide a range of
benefits along the microinsurance value chain, such as:
Lowering administration costs: Historically, insurance has been a paperbased
sector, with marketing brochures, application and claims forms, and policy
documents. To streamline systems and lower costs, microinsurance needs to
move beyond paper, and technology can make that possible. Increasingly, ICT
can be used for efficient, paperless administrative processes, thereby decreasing
costs per client. Over time, the efficiency gain could be reflected in lower premiums,
leading to higher product sales and thus offsetting some of the technology
costs incurred.