MR Microinsurance_2012_03_29.indd - International Labour ...

576 Infrastructure and environment for microinsurance
very small weekly or monthly instalments and possibly premium subsidies and
payment grace periods). Products are often presented through a trusted intermediary
and incorporate specialized client outreach and education efforts. Each of
these aspects of product design and delivery may call for adaptations of conventional
approaches to consumer protection rules and supervision.
As noted, the drive towards simplicity and low cost may also mean that products
are bundled and that there is a commensurate level of non-disclosure (i.e.
passive selling). Consumer protection mechanisms need to ensure that policyholders
are fully aware of what they have purchased and of their rights; the
chapter addresses various approaches to achieving this.
Providers and business models: While microinsurance markets are underdeveloped
relative to their potential, they exhibit a wide range of business models
and underlying marketing mixes. 4 These innovations offer the promise of making
risk management services more widely available. However, they can also raise
consumer protection concerns.
One key concern invloves distribution arrangements. The search for costeffective
ways to reach lower-income, less educated and more remote consumers
has led to distribution systems that include a range of players carrying out different
functions depending on their skills, technology, resources and influence. The
role of aggregators is prominent. The common “partner-agent model” typically
involves a conventional insurance company teaming up with an MFI. Other
major aggregators to date have been agricultural banks, non-governmental
organizations (NGOs), postal systems, and various forms of mutual or cooperative
institutions, sometimes in combination. The aggregator may have its own
captive insurer, place some or all risk with one or more commercial insurers, or
even carry the risk on its own balance sheet.
Recent innovations that could improve the value proposition of microinsurance
include the use of pre-paid cards and non-traditional distribution networks
such as pharmacies (Venezuela), mobile phone operators (Ghana), utilities
(Colombia), or retailers that service the low-income populations in the Philippines
and South Africa (see Chapter 22). Another innovation that could help
poorer people manage risks involves bundling. For example, when a borrower
takes a loan for an asset such as livestock, asset insurance may be offered on
attractive terms. In other cases, the purchase of agriculture supplies, such as seed
and fertilizer, triggers the automatic purchase of crop insurance.
4 Business model refers to the broad approach adopted, e.g. partner-agent, direct sales. Marketing mix
is more granular and defines the detailed combination of pricing, product, distribution and promotion
to be adopted.