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Microinsurance: The market of tomorrow
24 June 2010
Microinsurance is being touted as a wonder solution to help people in emerging markets afford insurance. It is less clear that insurance and reinsurance firms can make money from it, however.
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microinsurance
LeapFrog Investments
International Labour Organisation
ILO
Microinsurance Innovation Facility
Tata-AIG
The majority of the world’s population is excluded from fully participating in developed economies. With four billion people classified as low-income there is both the need and the opportunity for this to change.
In emerging markets, microinsurance can help to stabilise income levels, soften the blow of natural catastrophes, enable low-income people to take the risk of starting businesses, and make lenders more willing to lend to the poor.
Microinsurance is not an appropriate product for the destitute, but instead serves the needs of the working poor and the vulnerable non-poor. According to LeapFrog Investments, the world’s largest microinsurance investment fund, over one billion people are seeking, and are able, to pay for insurance. But the market is less than 9% penetrated.
Where it has been penetrated, microinsurance is being sold profitably over a range of product lines and is showing enormous potential for development and growth.
“There...
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