Protecting the poor

A microinsurance compendium

Craig Churchill

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About the Book

This authoritative compendium brings together the latest thinking of leading academics, actuaries, and development professionals in the microinsurance field. The result is a practical, wide-ranging resource which provides the most thorough overview of the subject to date.

 

The book allows readers to benefit from the valuable lessons learned from a project launched by the CGAP Working Group on Microinsurance analysing operations around the world. Essential reading for insurance professionals, practitioners and anyone involved with offering insurance to low-income persons, this volume covers the many aspects of microinsurance in detail, including product design, marketing, premium collection and governance.

 

It also discusses the various institutional arrangements available for delivery such as the community- based approach, insurance companies owned by networks of savings and credit cooperatives and microfinance institutions.

 

The roles of key stakeholders are also explored and the book offers insightful strategies for achieving the right balance between coverage, costs and price.

 


Reviews

Insurance – among other financial services – is a powerful way to help poor people manage the myriad of risks that are part of their everyday lives. This comprehensive compendium comes at a key moment, as funders, governments, microfinance institutions and even commercial insurers are increasingly interested in insurance services for low-income people. Peppered with examples from over 20 case studies, this essential guide combines in-depth analysis with readability, a remarkable achievement on a topic of critical importance to improving the lives of the poor.
  Elisabeth Littlefield
  CEO, Consultative Group to Assist the Poor (CGAP)
 
The planning process has brought about significant and pronounced transformation in rural areas and among the disadvantaged sections of the population in India. This has paved the way for the financial sector to step in and extend their services more as a business opportunity than as an obligatory service. The Micro Insurance Regulations enacted by the Insurance Regulatory and Development Authority facilitate extension of insurance intermediation in a smooth and seamless manner and at affordable cost to meet the overarching objective of inclusive growth. The publication Protecting the Poor: A Microinsurance Compendium enables policy-makers, insurers, academics and NGOs an opportunity to study the various initiatives taken in different countries and profit from these experiences. I congratulate the publishers for bringing out this excellent compendium.
  C.S. Rao
  Chairman, Insurance Regulatory and
  Development Authority (IRDA), India
 
Microinsurance is now a mainstream development topic. Research over the last 15 years shows clearly and consistently that the main reasons people fall below the poverty line are related to idiosyncratic risks such as the death of a wage earner or, more frequently, catastrophic health expenditures. Insurance, in conjunction with savings and credit, provides a mechanism whereby the working poor can retain their productive assets after such discontinuities. This compendium provides an invaluable summation of the state of the art and will hopefully encourage people with relevant skills and unfettered minds to look at what they can contribute to grassroots risk management.
  Rodney Lester
  Program Director, Financial Markets for
  Social Safety Net, The World Bank
 
Poor households employ various strategies to protect against risk. These include building stocks of food or saving small amounts. Some risk situations are more predictable than others, and if the expected impact is small, it is easier for a poor household to prepare for these. However, events that are unexpected and that may cause significant damage in terms of lost income or increased expenditures pose high financial pressures to poor households. Availing microinsurance helps poor households better manage unexpected events such as accidents, serious illness, and death. Protecting the Poor builds on experiences and lessons made to-date and thus is an important step for innovations of the future.
  Dr. Aristotle Alip,
  President, CARD Bank, Philippines


 

About the Author(s) / Editor(s)

Craig Churchill joined the ILO’s Social Finance Programme in 2001. Craig has microfinance experience in both developed and developing countries having previously worked for Get Ahead Foundation in South Africa, ACCION International, the MicroFinance Network and Calmeadow. In his current position, he focuses primarily on the role of financial services that the poor can use to manage risks and reduce their vulnerability, including microinsurance. He serves as Chair of the CGAP Working Group on Microinsurance and on the editorial boards of the MicroBanking Bulletin and the Journal of Microfinance. Craig has authored and edited dozens of articles, papers and monographs on various microfinance topics including microinsurance, customer loyalty, organizational development and management, governance, lending methodologies, and regulation and supervision.




Contents in Detail

 Acknowledgement

Table of Acronyms

Introduction

 

 Part 1 Principles and practices


1.1    What is insurance for the poor? (Craig Churchill) 
     1  Defining microinsurance
     2  The two faces of microinsurance
     3  What a difference three words make

 

1.2    The demand for microinsurance (Monique Cohen and

        Jennefer Sebstad)
     1  Managing risk
     2  The importance of understanding the demand for microinsurance
     3  Current coping strategies: Strengths and weaknesses
     4  Opportunities for microinsurance
     5  Conclusion

 

1.3    The social protection perspective on microinsurance

        (Christian Jacquier,Gabriele Ramm,Philippe Marcadent

         and Valérie Schmitt-Diabate)

     1  Introduction
     2  What is social security? What is social protection?
     3  What is microinsurance)
     4  Potential and limitation of microinsurance as a social
         protection mechanism
     5  How can microinsurance be used to extend social protection?
     6  Conclusion

 

 

Part 2 Microinsurance products and services

 

2.1    Challenges and strategies to extend health insurance to the
         poor (Ralf Radermacher, Iddo Dror and Gerry Noble)          
     1  Product manufacturing           
     2  Product sales          
     3  Product servicing          
     4  Maintenance of long-term stability          
     5  Conclusion

 

2.2    Long-term savings and insurance (James Roth,

         Denis Garand and Stuart Rutherford)          
     1  Providing savings to the poor
     2  Long-term savings and insurance products for the poor
     3  Key issues in offering long-term savings and insurance
     4  Conclusions

 

2.3    Savings- and credit-linked insurance (Sven Enarsson,
         Kjell Wirén and Gloria Almeyda)
     1  Loan-linked products
     2  Savings-linked insurance
     3  Product design and delivery issues
     4  Conclusions

 

2.4    Meeting the special needs of women and children
         Mosleh Ahmed and Gabriele Ramm)
     1  Special risks affecting women and children (girls and boys)
     2  Microinsurance to address the special needs of women and children
     3  Policy tasks to improve the strategic situation of women and children
     4  Conclusions

 

 

Part 3 Microinsurance operations
          

3.1    Product design and insurance risk management

        (John Wipf, Dominic Liber andCraig Churchill)          
     1  Market research          
     2  Eligibility          
     3  Terms and payment options          
     4  Benefits          
     5  Risk management and claims controls          
     6  Conclusions


3.2    Marketing microinsurance (Craig Churchill and Monique Cohen)          
     1  Main marketing messages          
     2  Marketing techniques          
     4  Marketing and mandatory insurance          
     5  Conclusion


3.3    Premium collection: Minimizing transaction costs and maximizing
         customer service (Michael J. McCord, Grzegorz Buczkowski

          and Priyanka Saksena)
     1  Modes of premium collection      
     2  Collection frequency and timing      
     3  Client considerations
     4  Premium collection controls          
     5  Conclusion


3.4    Claims processing (Michael J. McCord and Richard Leftley)          
     1  Introduction          
     2  Claims notification          
     3  Settlement          
     4  Controls          
     5  Claims considerations in product design          
     6  Conclusions

 
3.5    Pricing microinsurance products
         (John Wipf and Denis Garand)          
     
    1  Database design requirements for pricing (and sound microinsurance  
         management)
     2  Pricing components, key factors and methodology          
     3  Modelling techniques
     4  Conclusions


3.6    Risk and financial management (Denis Garand and John Wipf)
     1  The risks inherent in insurance products
     2  Capital requirements
     3  Reserves     
     4  Reinsurance      
     5  Investment management 
     6  Profit distribution
     7  Conclusion


3.7     Organization development in microinsurance
          (Craig Churchill and Richard Leftley)          
     1  Organizational structure: Where does
         microinsurance fit in?          
     2  Recruitment: Where to access appropriate expertise          
     3  Training          
     4  Compensation          
     5  Institutional culture
     6  Conclusions


3.8    Governance (Zahid Qureshi)
     1  Governance in microinsurance
     2  Board composition and expertise
     3  The foundation stone
     4  Microinsurance governance in practice
     5  Conclusions

 

3.9    Loss control (Zahid Qureshi and Gerry Noble)
     1  A retrospective look at loss prevention
     2  Converging interests     
     3  Pinpointing prevention
     4  Practising prevention
     5  Minimization: A stitch in time
     6  Evaluating the return on investment in prevention      
     7  Conclusions

 

3.10    Performance indicators and benchmarking
           (Denis Garand and John Wipf)
     1  Marketing and distribution
     2  Financial management and viability
     3  Efficiency and client value
     4  Investment management
     5  Conclusions

 

 

Part 4 Institutional options

 

4.1    Cooperatives and insurance: The mutual advantage

         (Klaus Fischer and Zahid Qureshi)          
     1  Introduction
     2  What is a mutual insurer?
     3  The cooperative difference
     4  Insurance development models and stages
     5  Insurance products offered under the cooperative network model
     6  Why mutuals develop networks and how they work
     7  Advantages and disadvantages of the model
     8  Conclusion

 

4.2    The partner-agent model: Challenges and opportunities
         (Michael J. McCord)
     1  Why a partner-agent model?
     2  How the partner-agent model works
     3  The good and the bad
     4  Advantages and disadvantages 
     5  Conclusions

 

4.3    The community-based model: Mutual health organizations in
         Africa(Bénédicte Fonteneau and Bruno Galland)          
     1  What is a community-based model?          
     2  Why was/is this approach implemented in West Africa?          
     3  What is the target group of the community-based model?          
     4  Do MHOs function (well) and make a significant impact?          
     5  What are the origins of the problems?          
     6  What is the added value of this model?          
     7  Conclusion

          
4.4    Institutional options for delivering health microinsurance
         (Ralf Radermacher and Iddo Dror)          
     1  Institutional options          
     2  Value, interests and conflicts in the insurance business process          
     3  Conclusion


4.5    Beyond MFIs and community-based models: Institutional
         alternatives (Richard Leftley and James Roth)
     1  Risk-carrying alternatives          
     2  Administrative alternatives          
     3  Distribution alternatives          
     4  Conclusions

    
4.6    Retailers as microinsurance distribution channels
         (James Roth and Doubell Chamberlain)          
     1  Why retailers? Which retailers?          
     2  Microinsurance distribution/Product combinations for retailers          
     3  Conclusions

 

4.7    Microinsurance: Opportunities and pitfalls for microfinance institutions
         (Craig Churchill and James Roth)          
     1  Institutional arrangements          
     2  The type of insurance          
     3  Conclusions

 

 

Part 5 The role of other stakeholders

 
5.1    The role of donors (Alexia Latortue)          
     1  An analytical framework          
     2  Donor requirements to effectively support microinsurance          
     3  Types of donor support for microinsurance          
     4  Conclusion


5.2    An enabling regulatory environment for microinsurance
         (Martina Wiedmaier-Pfister and Arup Chatterjee)
     1  Background
     2  Barriers in existing regulatory frameworks          
     3  Country experiences – preliminary insights          
     4  Conclusions

 

5.3    The promotional role of governments (Sabine Trommershäuser,
         Roland Lindenthal and Rüdiger Krech)
     1  Policy-making, participation and consensus-building
     2  Creating an enabling environment
     3  Strengthening institutions
     4  Providing financial assistance
     5  Concluding remarks

 

5.4    The role of insurers and reinsurers in supporting insurance for
          the poor(David M. Dror and Thomas Wiechers)
     1  The value proposition of reinsurance
     2  Involvement of commercial insurers and reinsurers in microinsurance
     3  What part of this value proposition can insurers and reinsurers deliver?
     4  Recommendations    
     5  Conclusion

 

5.5    The provision of technical assistance

         (Richard Leftley and Richard Lacasse)
     1  Why is technical assistance required?
     2  What does a TA provider do?
     3  Who provides microinsurance technical assistance?     
     4  Conclusion: Providing quality technical assistance    

 

 

     Part 6 Conclusions


6.1    Strategies for sustainability (Craig Churchill and Denis Garand)     
     1  Limit benefits
     2  Focus on efficiency
     3  Diversify income sources
     4  Good management

 

6.2    The future of microinsurance (Felipe Botero, Craig Churchill,
         Michael J. McCord and Zahid Qureshi)     
     1  Microinsurance customers of the future
     2  Microinsurance providers of the future
     3  The regulatory landscape
     4  The environment for microinsurance
     5  Embracing the future

 

Appendix I: Description of microinsurance providers


Appendix II: About the authors


Bibliography


Index
 
      

 


     List of tables       

  
     1  Microinsurance providers and products          
     2  Priority risks in selected countries          
     3  Coping strategy by risk          
     4  Examples of informal group-based insurance systems          
     5  Test for an insurable risk          
     6  Typology of microinsurance linkages          
     7  Overview of product manufacturing tasks and features          
     8  Overview of product sales tasks and features          
     9  Overview of product servicing tasks and features          
     10 Some key ratios of health microinsurers          
     11 Overview of the tasks to be undertaken to
          maintain long-term stability          
     12 Two insurers with endowment products          
     13 CARD MBA’s loan protection plus family
          funeral insurance          
     14 Different benefit classes for minimum/maximum
          premiums at Yasiru          
     15 Market coverage of selected voluntary life
          insurance products          
     16 VimoSEWA’s coverage and price in rupees          
     17 Benefits of LIC’s Janashree Bima Yojana          
     18 Benefits from UIIC’s UniMicro insurance scheme          
     19 Benefits of La Equidad’s Ampararmicroinsurance product          
     20 Coinsurance and payment ceiling of health microinsurers          
     21 Benefit amounts at CARD MBA          
     22 Rolling admission versus annual campaign          
     23 Marketing checklist for microinsurance managers          
     24 Comparison of premium collection modes          
     25 A sample of claims durations          
     26 Evolution of life mortality rate at VimoSEWA          
     27 Claims experience of VimoSEWA’s child benefit

     28 Potential effect of investment mismatch on CARD’s

          Provident Fund – An illustration

     29 Average monthly earnings for frontline staff (US$)          
     30 Commissions on long-term policies at ALMAO and Tata-AIG          
     31 Non-life and life insurance loss prevention          
     32 Improved service enhances retention at VimoSEWA (India)          
     33 Selected examples of net income          
     34 Expense and claims rations for selected schemes          
     35 Rating of microinsurance schemes – An illustration          
     36 Case studies that correspond to the cooperative network model          
     37 Insurance products offered by SACCO networks          
     38 ASA’s cost per policy          
     39 ASA’s profit/loss per policy          
     40 Performance of four microinsurance schemes in Zambia          
     41 Advantages and disadvantages to the agent

          compared to self-insuring          
     42 Advantages and disadvantages for an insurer          
     43 Advantages and disadvantages for low-income policy-holders          
     44 A comparison of premiums and benefits for selected MHOs          
     45 Basic motivations and primary interest through

          the business process
     46 HTG funeral insurance product
     47 Does self-insurance provide greater client value?
     48 Definition of microinsurance in India
     49 Partnership factors for an insurance or reinsurance company
     51 Advantages and disadvantages of long-term, on-site TA support
     52 Continuing challenges that limit the expansion of microinsurance
     53 Process automation transforms insurance operations
 

     List of figures

     1  Janus: The two faces of microinsurance          
     2  Impact of shocks on household income and assets          
     3  The impact of risks          
     4  The locus of microinsurance          
     5  A dynamic approach to extending social protection
         through microinsurance          
     6  Health insurance product design          
     7  Claims model 1: Insurer pays healthcare provider
         (third-party payment)          
     8  Claims model 2: Integrated healthcare and insurance provider

          (internal financial transaction)
      9  Claims model 3: Insurer reimburses clients’ out-of-pocket

          healthcare expenses
     10 Daughter’s wedding insurance plan: Delta Life          
     11 Marketing brochure: Yeshasvini          
     12 Guaranteed savings brochure: TUW SKOK          
     13 Three-step marketing process        
     14 Microinsurance drop-outs and access to microcredit          
     15 Typical claims settlement process for
          Madison’s microinsurance product          
     16 The claims process at UMSGF          
     17 Microcare and Opportunity International claim form          
     18 CARD MBA timing of claims          
     19 Kharif Hungama sales prizes          
     20 Organizational chart of Tata-AIG          
     21 Illustrating Grameen’s 16 decisions          
     22 The circular logic of customer retention          
     23 Distribution of microinsurance products in
          the SACCO network model          
     24 A mutual network structure with its portfolio
         of functional subsidiaries          
     25 The MHO system          
     26 Types of health insurance provision          
     27a The partner-agent model          
     27b The partner-agent model with TPA          
     28 The charitable insurance model          
     29 The provider-driven model          
     30 The community-based/mutual model          
     31 Three components of insurance provision          
     32 Yeshasvini’s claim settlement process          
     33 Micro-agents, CRIGs and NGOs in the
          premium-collection process          
     34 An analytical framework for donor support
          for microinsurance
     35 The Aid Effectiveness Star          
     36 The what, who and how of microinsurance technical assisatance
     37 The RIMANSI model of technical assistance to MBAs
     38 Striking a balance: The microinsurance challenge
     39 Perspectives on the future          


     List of boxes

     1  Microinsurance and the MDGs
     2  Applying Prahalad’s “Twelve Principles

        of Innovation for BOP Markets” to microinsurance
     3  Impact of shocks on the rich and poor in Viet Nam          
     4  Risks and risk management in Malawi          
     5  Coping strategies in Viet Nam          
     6  Risk management and over-indebtedness in Georgia          
     7  Membership in multiple burial societies          
     8  High cost of funerals in Zambia          
     9  Understanding the demand for microinsurance
         in Sri Lanka          
     10 We want to know more . .          
     11 The extension of social protection through
          microinsurance in Colombia          
     12 Linkages in the Philippines          
     13 Developing balanced linkages in Senegal          
     14 The Global Social Trust          
     15 Cambodia’s Master Plan          
     16 An integrated approach to social
         protection in Senegal          
     17 BRAC’s three-tier approach to providing
          health services          
     18 CARD’s foray into annuities          
     19 Grameen’s deposit pension scheme (GPS)          
     20 Mis-selling in South Africa          
     21 Life insurance as an alternative to loan protection?          
     22 Illness cover in a credit life policy?          
     23 Shepherd’s Sugam Fund          
     24 Outreach at Yeshasvini          
     25 Family coverage at UMSFG          
     26 Lapses at Delta Life          
     27 Flat-rate pricing for Shepherd          
     28 Mass weddings          
     29 UHC definition of family in Uganda          
     30 Creating awareness: The experience of the South African Insurance  
          Association
     31 UMSGF’s three-tiered marketing strategy          
     32 Regional differences in Zambia          
     33 Sales challenges at TUW SKOK          
     34 Linking insurance premiums to loans          
     35 Flexible premium payments for funeral
          insurance in South Africa          
     36 Paying premiums in milk at Yeshasvini          
     37 Delta Life – combining microcredit
          and microinsurance          
     38 Claim rejection: A case of insufficient
          documentation in Zambia          
     39 Beneficiary frustration          
     40 Requirements for an advance payment at Columna          
     41 The many stops in claims settlement at Delta Life          
     42 Efficiencies of informal insurance          
     43 Claims adjustment and HIV/AIDS          
     44 Pricing problems          
     45 Database design problems          
     46 Importance of a health insurance MIS:
          Experience of AssEF          
     47 VimoSEWA’s renewal rates          
     48 VimoSEWA’s claims processing          
     49 Actuarial reserves and capital defined          
     50 Management risk illustrations          
     51 Organization development: How not to do it          
     52 Criteria in the selection of micro-agents at Tata-AIG          
     53 Frontline staff at CARD MBA          
     54 TUW SKOK’s outsourcing model          
     55 What is corporate governance?          
     56 The four pillars of governance          
     57 Responsibilities of the board of directors          
     58 Trust is good, but control is better          
     59 Read the writing on the wall          
     60 Taking the societal perspective          
     61 Promoting well-being          
     62 Prevention through sister organizations: VimoSEWA          
     63 Coping with disaster: The Japanese experience
     64 Microcare: Using insecticide-treated bed nets to reduce

          malaria-related claims
     65 Great value placed on insurance          
     66 What doomed Confederation Life of Canada?          
     67 Why cooperative insurance suits low-income markets          
     68 Management of lapses and claims:
          The mutual difference          
     69 Selling an insurance concept in Ghana          
     70 Partner-agent premium collection checklist          
     71 ASA’s on-again off-again relationship with
          the partner-agent model          
     72 Profiles of initiating organizations of MHOs          
     73 A variety of membership profiles          
     74 The target population of the rural MHOs          
     75 Union Technique de la Mutualité Malienne          
     76 Coordination Régionale des Mutuelles
          de Santé de Thiès          
     77 Réseau Alliance Santé, Benin          
     78 MHO performance: Some trends          
     79 The power of collective action          
     80 Nkoranza Community Health Insurance Plan          
     81 Zambuko Trust, Zimbabwe          
     82 VimoSEWA’s claims committee          
     83 Retailers and rural areas          
     84 AFL/CIO’s Union Privilege Scheme          
     85 Reducing the vulnerability of the poor:
          The case of Shepherd, India          
     86 Unleashing the catalytic role of the private
          sector with public subsidy          
     87 Providing support through donor guarantees          
     88 FinScope surveys: Getting to know the market          
     89 Lessons learnt the hard way: Illustrations from India          
     90 Informal insurance in South Africa          
     91 Formalization of ALMAO          
     92 Insurance cooperatives in Malawi          
     93 Capital requirements in Peru          
     94 Requirements for agents and brokers          
     95 AIG Uganda          
     96 The Insurance Ombudsman Sri Lanka          
     97 Health service providers and mutual health
          organizations (MHOs) in Mali          
     98 Stewardship in Guinea-Bissau          
     99 Facilitating links to UNDP in India          
     100 Subsidizing Yeshasvini Trust

     101 Africa Re          
      102 What do microinsurers get out of reinsurance?          
      103 A short summary of the social reinsurance model
      104 Actuarial reviews of microinsurance schemes          
      105 The 7 Cs of technical assistance          
      106 Technical assistance partnerships: DID and CIF          
      107 Management tools for microinsurance          
      108 Technological advances in banking services for the poor


Publisher AF Press
Publication Date 2008
Number of Pages 654
ISBN 9788171886708
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Academic Foundation (AF), based in New Delhi, is India’s leading independent publisher of academic/scholarly books in Social Sciences, specialising in Economics—Development Economics and Indian Economy in particular, and allied subjects.

About the Book

This authoritative compendium brings together the latest thinking of leading academics, actuaries, and development professionals in the microinsurance field. The result is a practical, wide-ranging resource which provides the most thorough overview of the subject to date.

 

The book allows readers to benefit from the valuable lessons learned from a project launched by the CGAP Working Group on Microinsurance analysing operations around the world. Essential reading for insurance professionals, practitioners and anyone involved with offering insurance to low-income persons, this volume covers the many aspects of microinsurance in detail, including product design, marketing, premium collection and governance.

 

It also discusses the various institutional arrangements available for delivery such as the community- based approach, insurance companies owned by networks of savings and credit cooperatives and microfinance institutions.

 

The roles of key stakeholders are also explored and the book offers insightful strategies for achieving the right balance between coverage, costs and price.

 


Reviews

Insurance – among other financial services – is a powerful way to help poor people manage the myriad of risks that are part of their everyday lives. This comprehensive compendium comes at a key moment, as funders, governments, microfinance institutions and even commercial insurers are increasingly interested in insurance services for low-income people. Peppered with examples from over 20 case studies, this essential guide combines in-depth analysis with readability, a remarkable achievement on a topic of critical importance to improving the lives of the poor.
  Elisabeth Littlefield
  CEO, Consultative Group to Assist the Poor (CGAP)
 
The planning process has brought about significant and pronounced transformation in rural areas and among the disadvantaged sections of the population in India. This has paved the way for the financial sector to step in and extend their services more as a business opportunity than as an obligatory service. The Micro Insurance Regulations enacted by the Insurance Regulatory and Development Authority facilitate extension of insurance intermediation in a smooth and seamless manner and at affordable cost to meet the overarching objective of inclusive growth. The publication Protecting the Poor: A Microinsurance Compendium enables policy-makers, insurers, academics and NGOs an opportunity to study the various initiatives taken in different countries and profit from these experiences. I congratulate the publishers for bringing out this excellent compendium.
  C.S. Rao
  Chairman, Insurance Regulatory and
  Development Authority (IRDA), India
 
Microinsurance is now a mainstream development topic. Research over the last 15 years shows clearly and consistently that the main reasons people fall below the poverty line are related to idiosyncratic risks such as the death of a wage earner or, more frequently, catastrophic health expenditures. Insurance, in conjunction with savings and credit, provides a mechanism whereby the working poor can retain their productive assets after such discontinuities. This compendium provides an invaluable summation of the state of the art and will hopefully encourage people with relevant skills and unfettered minds to look at what they can contribute to grassroots risk management.
  Rodney Lester
  Program Director, Financial Markets for
  Social Safety Net, The World Bank
 
Poor households employ various strategies to protect against risk. These include building stocks of food or saving small amounts. Some risk situations are more predictable than others, and if the expected impact is small, it is easier for a poor household to prepare for these. However, events that are unexpected and that may cause significant damage in terms of lost income or increased expenditures pose high financial pressures to poor households. Availing microinsurance helps poor households better manage unexpected events such as accidents, serious illness, and death. Protecting the Poor builds on experiences and lessons made to-date and thus is an important step for innovations of the future.
  Dr. Aristotle Alip,
  President, CARD Bank, Philippines


 

About the Author(s) / Editor(s)

Craig Churchill joined the ILO’s Social Finance Programme in 2001. Craig has microfinance experience in both developed and developing countries having previously worked for Get Ahead Foundation in South Africa, ACCION International, the MicroFinance Network and Calmeadow. In his current position, he focuses primarily on the role of financial services that the poor can use to manage risks and reduce their vulnerability, including microinsurance. He serves as Chair of the CGAP Working Group on Microinsurance and on the editorial boards of the MicroBanking Bulletin and the Journal of Microfinance. Craig has authored and edited dozens of articles, papers and monographs on various microfinance topics including microinsurance, customer loyalty, organizational development and management, governance, lending methodologies, and regulation and supervision.




Contents in Detail

 Acknowledgement

Table of Acronyms

Introduction

 

 Part 1 Principles and practices


1.1    What is insurance for the poor? (Craig Churchill) 
     1  Defining microinsurance
     2  The two faces of microinsurance
     3  What a difference three words make

 

1.2    The demand for microinsurance (Monique Cohen and

        Jennefer Sebstad)
     1  Managing risk
     2  The importance of understanding the demand for microinsurance
     3  Current coping strategies: Strengths and weaknesses
     4  Opportunities for microinsurance
     5  Conclusion

 

1.3    The social protection perspective on microinsurance

        (Christian Jacquier,Gabriele Ramm,Philippe Marcadent

         and Valérie Schmitt-Diabate)

     1  Introduction
     2  What is social security? What is social protection?
     3  What is microinsurance)
     4  Potential and limitation of microinsurance as a social
         protection mechanism
     5  How can microinsurance be used to extend social protection?
     6  Conclusion

 

 

Part 2 Microinsurance products and services

 

2.1    Challenges and strategies to extend health insurance to the
         poor (Ralf Radermacher, Iddo Dror and Gerry Noble)          
     1  Product manufacturing           
     2  Product sales          
     3  Product servicing          
     4  Maintenance of long-term stability          
     5  Conclusion

 

2.2    Long-term savings and insurance (James Roth,

         Denis Garand and Stuart Rutherford)          
     1  Providing savings to the poor
     2  Long-term savings and insurance products for the poor
     3  Key issues in offering long-term savings and insurance
     4  Conclusions

 

2.3    Savings- and credit-linked insurance (Sven Enarsson,
         Kjell Wirén and Gloria Almeyda)
     1  Loan-linked products
     2  Savings-linked insurance
     3  Product design and delivery issues
     4  Conclusions

 

2.4    Meeting the special needs of women and children
         Mosleh Ahmed and Gabriele Ramm)
     1  Special risks affecting women and children (girls and boys)
     2  Microinsurance to address the special needs of women and children
     3  Policy tasks to improve the strategic situation of women and children
     4  Conclusions

 

 

Part 3 Microinsurance operations
          

3.1    Product design and insurance risk management

        (John Wipf, Dominic Liber andCraig Churchill)          
     1  Market research          
     2  Eligibility          
     3  Terms and payment options          
     4  Benefits          
     5  Risk management and claims controls          
     6  Conclusions


3.2    Marketing microinsurance (Craig Churchill and Monique Cohen)          
     1  Main marketing messages          
     2  Marketing techniques          
     4  Marketing and mandatory insurance          
     5  Conclusion


3.3    Premium collection: Minimizing transaction costs and maximizing
         customer service (Michael J. McCord, Grzegorz Buczkowski

          and Priyanka Saksena)
     1  Modes of premium collection      
     2  Collection frequency and timing      
     3  Client considerations
     4  Premium collection controls          
     5  Conclusion


3.4    Claims processing (Michael J. McCord and Richard Leftley)          
     1  Introduction          
     2  Claims notification          
     3  Settlement          
     4  Controls          
     5  Claims considerations in product design          
     6  Conclusions

 
3.5    Pricing microinsurance products
         (John Wipf and Denis Garand)          
     
    1  Database design requirements for pricing (and sound microinsurance  
         management)
     2  Pricing components, key factors and methodology          
     3  Modelling techniques
     4  Conclusions


3.6    Risk and financial management (Denis Garand and John Wipf)
     1  The risks inherent in insurance products
     2  Capital requirements
     3  Reserves     
     4  Reinsurance      
     5  Investment management 
     6  Profit distribution
     7  Conclusion


3.7     Organization development in microinsurance
          (Craig Churchill and Richard Leftley)          
     1  Organizational structure: Where does
         microinsurance fit in?          
     2  Recruitment: Where to access appropriate expertise          
     3  Training          
     4  Compensation          
     5  Institutional culture
     6  Conclusions


3.8    Governance (Zahid Qureshi)
     1  Governance in microinsurance
     2  Board composition and expertise
     3  The foundation stone
     4  Microinsurance governance in practice
     5  Conclusions

 

3.9    Loss control (Zahid Qureshi and Gerry Noble)
     1  A retrospective look at loss prevention
     2  Converging interests     
     3  Pinpointing prevention
     4  Practising prevention
     5  Minimization: A stitch in time
     6  Evaluating the return on investment in prevention      
     7  Conclusions

 

3.10    Performance indicators and benchmarking
           (Denis Garand and John Wipf)
     1  Marketing and distribution
     2  Financial management and viability
     3  Efficiency and client value
     4  Investment management
     5  Conclusions

 

 

Part 4 Institutional options

 

4.1    Cooperatives and insurance: The mutual advantage

         (Klaus Fischer and Zahid Qureshi)          
     1  Introduction
     2  What is a mutual insurer?
     3  The cooperative difference
     4  Insurance development models and stages
     5  Insurance products offered under the cooperative network model
     6  Why mutuals develop networks and how they work
     7  Advantages and disadvantages of the model
     8  Conclusion

 

4.2    The partner-agent model: Challenges and opportunities
         (Michael J. McCord)
     1  Why a partner-agent model?
     2  How the partner-agent model works
     3  The good and the bad
     4  Advantages and disadvantages 
     5  Conclusions

 

4.3    The community-based model: Mutual health organizations in
         Africa(Bénédicte Fonteneau and Bruno Galland)          
     1  What is a community-based model?          
     2  Why was/is this approach implemented in West Africa?          
     3  What is the target group of the community-based model?          
     4  Do MHOs function (well) and make a significant impact?          
     5  What are the origins of the problems?          
     6  What is the added value of this model?          
     7  Conclusion

          
4.4    Institutional options for delivering health microinsurance
         (Ralf Radermacher and Iddo Dror)          
     1  Institutional options          
     2  Value, interests and conflicts in the insurance business process          
     3  Conclusion


4.5    Beyond MFIs and community-based models: Institutional
         alternatives (Richard Leftley and James Roth)
     1  Risk-carrying alternatives          
     2  Administrative alternatives          
     3  Distribution alternatives          
     4  Conclusions

    
4.6    Retailers as microinsurance distribution channels
         (James Roth and Doubell Chamberlain)          
     1  Why retailers? Which retailers?          
     2  Microinsurance distribution/Product combinations for retailers          
     3  Conclusions

 

4.7    Microinsurance: Opportunities and pitfalls for microfinance institutions
         (Craig Churchill and James Roth)          
     1  Institutional arrangements          
     2  The type of insurance          
     3  Conclusions

 

 

Part 5 The role of other stakeholders

 
5.1    The role of donors (Alexia Latortue)          
     1  An analytical framework          
     2  Donor requirements to effectively support microinsurance          
     3  Types of donor support for microinsurance          
     4  Conclusion


5.2    An enabling regulatory environment for microinsurance
         (Martina Wiedmaier-Pfister and Arup Chatterjee)
     1  Background
     2  Barriers in existing regulatory frameworks          
     3  Country experiences – preliminary insights          
     4  Conclusions

 

5.3    The promotional role of governments (Sabine Trommershäuser,
         Roland Lindenthal and Rüdiger Krech)
     1  Policy-making, participation and consensus-building
     2  Creating an enabling environment
     3  Strengthening institutions
     4  Providing financial assistance
     5  Concluding remarks

 

5.4    The role of insurers and reinsurers in supporting insurance for
          the poor(David M. Dror and Thomas Wiechers)
     1  The value proposition of reinsurance
     2  Involvement of commercial insurers and reinsurers in microinsurance
     3  What part of this value proposition can insurers and reinsurers deliver?
     4  Recommendations    
     5  Conclusion

 

5.5    The provision of technical assistance

         (Richard Leftley and Richard Lacasse)
     1  Why is technical assistance required?
     2  What does a TA provider do?
     3  Who provides microinsurance technical assistance?     
     4  Conclusion: Providing quality technical assistance    

 

 

     Part 6 Conclusions


6.1    Strategies for sustainability (Craig Churchill and Denis Garand)     
     1  Limit benefits
     2  Focus on efficiency
     3  Diversify income sources
     4  Good management

 

6.2    The future of microinsurance (Felipe Botero, Craig Churchill,
         Michael J. McCord and Zahid Qureshi)     
     1  Microinsurance customers of the future
     2  Microinsurance providers of the future
     3  The regulatory landscape
     4  The environment for microinsurance
     5  Embracing the future

 

Appendix I: Description of microinsurance providers


Appendix II: About the authors


Bibliography


Index
 
      

 


     List of tables       

  
     1  Microinsurance providers and products          
     2  Priority risks in selected countries          
     3  Coping strategy by risk          
     4  Examples of informal group-based insurance systems          
     5  Test for an insurable risk          
     6  Typology of microinsurance linkages          
     7  Overview of product manufacturing tasks and features          
     8  Overview of product sales tasks and features          
     9  Overview of product servicing tasks and features          
     10 Some key ratios of health microinsurers          
     11 Overview of the tasks to be undertaken to
          maintain long-term stability          
     12 Two insurers with endowment products          
     13 CARD MBA’s loan protection plus family
          funeral insurance          
     14 Different benefit classes for minimum/maximum
          premiums at Yasiru          
     15 Market coverage of selected voluntary life
          insurance products          
     16 VimoSEWA’s coverage and price in rupees          
     17 Benefits of LIC’s Janashree Bima Yojana          
     18 Benefits from UIIC’s UniMicro insurance scheme          
     19 Benefits of La Equidad’s Ampararmicroinsurance product          
     20 Coinsurance and payment ceiling of health microinsurers          
     21 Benefit amounts at CARD MBA          
     22 Rolling admission versus annual campaign          
     23 Marketing checklist for microinsurance managers          
     24 Comparison of premium collection modes          
     25 A sample of claims durations          
     26 Evolution of life mortality rate at VimoSEWA          
     27 Claims experience of VimoSEWA’s child benefit

     28 Potential effect of investment mismatch on CARD’s

          Provident Fund – An illustration

     29 Average monthly earnings for frontline staff (US$)          
     30 Commissions on long-term policies at ALMAO and Tata-AIG          
     31 Non-life and life insurance loss prevention          
     32 Improved service enhances retention at VimoSEWA (India)          
     33 Selected examples of net income          
     34 Expense and claims rations for selected schemes          
     35 Rating of microinsurance schemes – An illustration          
     36 Case studies that correspond to the cooperative network model          
     37 Insurance products offered by SACCO networks          
     38 ASA’s cost per policy          
     39 ASA’s profit/loss per policy          
     40 Performance of four microinsurance schemes in Zambia          
     41 Advantages and disadvantages to the agent

          compared to self-insuring          
     42 Advantages and disadvantages for an insurer          
     43 Advantages and disadvantages for low-income policy-holders          
     44 A comparison of premiums and benefits for selected MHOs          
     45 Basic motivations and primary interest through

          the business process
     46 HTG funeral insurance product
     47 Does self-insurance provide greater client value?
     48 Definition of microinsurance in India
     49 Partnership factors for an insurance or reinsurance company
     51 Advantages and disadvantages of long-term, on-site TA support
     52 Continuing challenges that limit the expansion of microinsurance
     53 Process automation transforms insurance operations
 

     List of figures

     1  Janus: The two faces of microinsurance          
     2  Impact of shocks on household income and assets          
     3  The impact of risks          
     4  The locus of microinsurance          
     5  A dynamic approach to extending social protection
         through microinsurance          
     6  Health insurance product design          
     7  Claims model 1: Insurer pays healthcare provider
         (third-party payment)          
     8  Claims model 2: Integrated healthcare and insurance provider

          (internal financial transaction)
      9  Claims model 3: Insurer reimburses clients’ out-of-pocket

          healthcare expenses
     10 Daughter’s wedding insurance plan: Delta Life          
     11 Marketing brochure: Yeshasvini          
     12 Guaranteed savings brochure: TUW SKOK          
     13 Three-step marketing process        
     14 Microinsurance drop-outs and access to microcredit          
     15 Typical claims settlement process for
          Madison’s microinsurance product          
     16 The claims process at UMSGF          
     17 Microcare and Opportunity International claim form          
     18 CARD MBA timing of claims          
     19 Kharif Hungama sales prizes          
     20 Organizational chart of Tata-AIG          
     21 Illustrating Grameen’s 16 decisions          
     22 The circular logic of customer retention          
     23 Distribution of microinsurance products in
          the SACCO network model          
     24 A mutual network structure with its portfolio
         of functional subsidiaries          
     25 The MHO system          
     26 Types of health insurance provision          
     27a The partner-agent model          
     27b The partner-agent model with TPA          
     28 The charitable insurance model          
     29 The provider-driven model          
     30 The community-based/mutual model          
     31 Three components of insurance provision          
     32 Yeshasvini’s claim settlement process          
     33 Micro-agents, CRIGs and NGOs in the
          premium-collection process          
     34 An analytical framework for donor support
          for microinsurance
     35 The Aid Effectiveness Star          
     36 The what, who and how of microinsurance technical assisatance
     37 The RIMANSI model of technical assistance to MBAs
     38 Striking a balance: The microinsurance challenge
     39 Perspectives on the future          


     List of boxes

     1  Microinsurance and the MDGs
     2  Applying Prahalad’s “Twelve Principles

        of Innovation for BOP Markets” to microinsurance
     3  Impact of shocks on the rich and poor in Viet Nam          
     4  Risks and risk management in Malawi          
     5  Coping strategies in Viet Nam          
     6  Risk management and over-indebtedness in Georgia          
     7  Membership in multiple burial societies          
     8  High cost of funerals in Zambia          
     9  Understanding the demand for microinsurance
         in Sri Lanka          
     10 We want to know more . .          
     11 The extension of social protection through
          microinsurance in Colombia          
     12 Linkages in the Philippines          
     13 Developing balanced linkages in Senegal          
     14 The Global Social Trust          
     15 Cambodia’s Master Plan          
     16 An integrated approach to social
         protection in Senegal          
     17 BRAC’s three-tier approach to providing
          health services          
     18 CARD’s foray into annuities          
     19 Grameen’s deposit pension scheme (GPS)          
     20 Mis-selling in South Africa          
     21 Life insurance as an alternative to loan protection?          
     22 Illness cover in a credit life policy?          
     23 Shepherd’s Sugam Fund          
     24 Outreach at Yeshasvini          
     25 Family coverage at UMSFG          
     26 Lapses at Delta Life          
     27 Flat-rate pricing for Shepherd          
     28 Mass weddings          
     29 UHC definition of family in Uganda          
     30 Creating awareness: The experience of the South African Insurance  
          Association
     31 UMSGF’s three-tiered marketing strategy          
     32 Regional differences in Zambia          
     33 Sales challenges at TUW SKOK          
     34 Linking insurance premiums to loans          
     35 Flexible premium payments for funeral
          insurance in South Africa          
     36 Paying premiums in milk at Yeshasvini          
     37 Delta Life – combining microcredit
          and microinsurance          
     38 Claim rejection: A case of insufficient
          documentation in Zambia          
     39 Beneficiary frustration          
     40 Requirements for an advance payment at Columna          
     41 The many stops in claims settlement at Delta Life          
     42 Efficiencies of informal insurance          
     43 Claims adjustment and HIV/AIDS          
     44 Pricing problems          
     45 Database design problems          
     46 Importance of a health insurance MIS:
          Experience of AssEF          
     47 VimoSEWA’s renewal rates          
     48 VimoSEWA’s claims processing          
     49 Actuarial reserves and capital defined          
     50 Management risk illustrations          
     51 Organization development: How not to do it          
     52 Criteria in the selection of micro-agents at Tata-AIG          
     53 Frontline staff at CARD MBA          
     54 TUW SKOK’s outsourcing model          
     55 What is corporate governance?          
     56 The four pillars of governance          
     57 Responsibilities of the board of directors          
     58 Trust is good, but control is better          
     59 Read the writing on the wall          
     60 Taking the societal perspective          
     61 Promoting well-being          
     62 Prevention through sister organizations: VimoSEWA          
     63 Coping with disaster: The Japanese experience
     64 Microcare: Using insecticide-treated bed nets to reduce

          malaria-related claims
     65 Great value placed on insurance          
     66 What doomed Confederation Life of Canada?          
     67 Why cooperative insurance suits low-income markets          
     68 Management of lapses and claims:
          The mutual difference          
     69 Selling an insurance concept in Ghana          
     70 Partner-agent premium collection checklist          
     71 ASA’s on-again off-again relationship with
          the partner-agent model          
     72 Profiles of initiating organizations of MHOs          
     73 A variety of membership profiles          
     74 The target population of the rural MHOs          
     75 Union Technique de la Mutualité Malienne          
     76 Coordination Régionale des Mutuelles
          de Santé de Thiès          
     77 Réseau Alliance Santé, Benin          
     78 MHO performance: Some trends          
     79 The power of collective action          
     80 Nkoranza Community Health Insurance Plan          
     81 Zambuko Trust, Zimbabwe          
     82 VimoSEWA’s claims committee          
     83 Retailers and rural areas          
     84 AFL/CIO’s Union Privilege Scheme          
     85 Reducing the vulnerability of the poor:
          The case of Shepherd, India          
     86 Unleashing the catalytic role of the private
          sector with public subsidy          
     87 Providing support through donor guarantees          
     88 FinScope surveys: Getting to know the market          
     89 Lessons learnt the hard way: Illustrations from India          
     90 Informal insurance in South Africa          
     91 Formalization of ALMAO          
     92 Insurance cooperatives in Malawi          
     93 Capital requirements in Peru          
     94 Requirements for agents and brokers          
     95 AIG Uganda          
     96 The Insurance Ombudsman Sri Lanka          
     97 Health service providers and mutual health
          organizations (MHOs) in Mali          
     98 Stewardship in Guinea-Bissau          
     99 Facilitating links to UNDP in India          
     100 Subsidizing Yeshasvini Trust

     101 Africa Re          
      102 What do microinsurers get out of reinsurance?          
      103 A short summary of the social reinsurance model
      104 Actuarial reviews of microinsurance schemes          
      105 The 7 Cs of technical assistance          
      106 Technical assistance partnerships: DID and CIF          
      107 Management tools for microinsurance          
      108 Technological advances in banking services for the poor


Publisher AF Press
Publication Date 2008
Number of Pages 654
ISBN 9788171886708
Expected delivery date:
02 Jul Usually ready in 2-3 days.

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Protecting the poor

Protecting the poor

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₹ 1,495.00