MR Microinsurance_2012_03_29.indd - International Labour ...

Th e potential of microinsurance for social protection
In general, non-public social protection schemes are fi nanced by contributions.
Th is is particularly the case for schemes that are run by commercial companies
(including private insurers, in which case the contributions are “premiums”),
by self-help groups (such as savings, credit and insurance groups) and by microfi
nance institutions. Even mutual support networks expect their members to give
their relatives and neighbours approximately as much as they have received from
others, the only exception being the charitable support provided by rich households
to the poor for philanthropic reasons (see Table 2.1).
Table 2.1 Overview of social protection schemes organized by the various players
Organized/ administered by: Financed by members’ contributions Financed by taxes or the voluntary donations
(addressing vulnerability and specifi c risks) of other households (addressing transient and
chronic poverty and a broad range of risks)
Government/public
Government/public – Social insurance schemes
– Social assistance schemes
authority
– National provident funds
– Universal cash transfer schemes
– Public credit schemes
– Cash/food-for-education schemes
– Cash/food-for-work schemes
– “Free” public healthcare systems
Commercial/private – Commercial savings schemes
companies
– Commercial credit schemes
– Private insurance contracts
Semi-formal self-help – Savings and credit clubs
groups
– Mutual insurance associations
Traditional networks networks Mutual support networks Charitable support provided by the rich to
poor households
Th e main challenge for social protection policies in developing countries
results from the fact that the coverage of many schemes is quite limited, in terms
of both scale and scope. Indeed, social insurance schemes reach only a minority
of the population (see Figure 2.1). With only a few exceptions, old-age insurance
covers no more than 40 per cent of the labour force in middle-income countries
and 10 per cent of the labour force in low-income countries (ILO, 2010). At the
same time, less than 12 per cent of the population have private health or pension
insurance (Drechsler and Jütting, 2005), and less than 5 per cent receive public
social assistance benefi ts (Barrientos and Holmes, 2007).
Eff orts to extend social insurance coverage are often constrained for fi nancial,
administrative and political reasons:
1) Most existing schemes are based on formal employment relationships and contributions
are shared by employees and employers. Th ese rules are diffi cult to apply
in relation to people in unstable, informal employment, especially those who are
self-employed.
2) Social insurance organizations face administrative problems in terms of monitoring
the enrolment of workers in the informal economy, collecting their contributions
and properly administering their claims.
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