Microinsurance in Rapid Expansion Says ILO, Munich Re Report

Thursday, April 12, 2012

According to the Microinsurance Innovation Facility of the International Labor Organizationand the Munich Re Foundation, “the number of microinsurance schemes worldwide has increased substantially over the past five years and now reaches an estimated 500 million worldwide.”

Microinsurance has been developed to “protect poor people against risks – such as accidents, illnesses, death in the family, natural disasters and property losses – in exchange for insurance premium payments tailored to their preferences and capacity to pay,” the organization’s latest report explained.

The second volume of the “Microinsurance Compendium, Protecting the poor” just published by the ILO and Munich Re, indicates that “the number of people covered by microinsurance rose from 78 million in 2007 to 135 million in 2009, reaching nearly 500 million today.”

Craig Churchill, Team Leader of the ILO’s Microinsurance Innovation Facility and Chair of the Microinsurance Network, noted: “Since 2008, we have seen numerous innovations emerging to overcome the challenges of providing viable insurance services to more low-income people, which is a global multi-stakeholder platform that aims to promote the development and delivery of effective insurance services for low-income people.

“Efforts now should focus on increasing effectiveness so that insurance products can successfully reduce their vulnerability. The Compendium comes at the right time to help insurers, delivery channels, donors and other stakeholders understand what it means to provide valuable risk-management services to the working poor,” he added.

The results show that Asia – with its two microinsurance powerhouses: China and India – is spearheading the trend. The two now account for “roughly 80 per cent of the market. It is estimated that 60 percent of people around the world who are covered by microinsurance live in India. Latin America accounts for 15 percent of the market and Africa 5 percent.”

Source: Insurance Journal (link opens in a new window)

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Base of the Pyramid, financial inclusion, microinsurance