2007 General Meeting Assemblée générale 2007 Montréal, Québec Denis Garand MICROINSURANCE IP General Meeting Assemblée générale 2007 Montréal, Québec Denis Garand MICROINSURANCE IP-31 Canadian Institute of Actuaries Canadian Institute of Actuaries L’Institut canadien des actuaires L’Institut canadien des actuaires

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 Millennium development goals ERADICATE EXTREME POVERTY AND HUNGER UNIVERSAL PRIMARY EDUCATION PROMOTE GENDER EQUALITY AND EMPOWER WOMEN REDUCE CHILD MORTALITY COMBAT HIV/AIDS, MALARIA AND OTHER DISEASES ENSURE ENVIRONMENTAL SUSTAINABILITY DEVELOP A GLOBAL PARTNERSHIP FOR DEVELOPMENT

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 Importance of Microinsurance In its first report, Insuring for Sustainability, the Insurance Working Group of the UNEP FI ranked nine global sustainability issues identified as vital for insurers to address. Topping the list is climate change, followed by microinsurance, lifelong income, health, emerging man-made risks, environmental liability, natural resources, recycling and internal resource efficiency.Insuring for Sustainability

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 Microinsurance market 3.0 billion earn less than $2 (US) a day 1.3 billion earn less than $1 (US) a day 72% of the world population has income below $3000 a year Source: World Bank

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 Micro Finance Founded by Muhammad Yunus (Grameen Bank in Bangladesh) –Lending without collateral –Doorstep service –Small payments –Impact on 110 million poor Spandana

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 What is Microinsurance? Living without insurance! Part of solution to lower poverty. Can Microinsurance be viable?

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 Who’s involved ILO CGAP World Bank Other agencies Insurance companies world wide 5 out of 10 actuaries Canadian!

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 Poverty and Microinsurance 100,000,000 become poor, each year, due to a lack of protection. (WHO 2005) Does the world have the correct priorities? –Health care cost Rwanda $200 million –War in Iraq $150 billion

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 Reasons for Decent into poverty

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 Why do people save or borrow - UGANDA S.No.ITEMS SAVEBORROW 1 For meeting household basic needs such as food, clothing, health services82%61% 2For emergency (burial, medical)70%32% 3For education of self, children or siblings or others35%19% 4For expanding your business19%15% 5To be able to leave something for my children12%- 6For starting up a new business11%7% 7For using later in life/old age10%- 8For purchase of livestock /cattle9%4% 9For social reasons (wedding, travel, bride price)8%3% 10For purchasing or building a house to rent out6%- 11To pay off debts-9% 12For improving a house-6% 13For agricultural implements - hoe, plow, tractor-3% Source: “Preliminary” findings from FinScope Survey (2007)

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 The cycle of poverty Most poor are very resourceful Major disaster, sell all assets Poverty is a cash flow management problem

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 Microinsurance in the world Credit life (40 million and viable) Accident insurance Life insurance Health (25 million and few are viable) Assorted general insurance and crop protection –Household goods (hut) –Weather insurance

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 Why micro health insurance? Principal reason for loan default for a MFI – health To maintain economic situation – does not reduce poverty Improve access To enhance overall productivity Problem in USA, India, Cambodia, etc.

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 What are the challenges? High mortality, morbidity, assets at risk Low administrative margins Ability to pay small amounts Transform your insurance organization

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 Successful micro insurance (or lesson we need to relearn) Local organization (distribution) –Brand name –Clear communication, one page contract (pictorial) –Target high participation –Efficient premium collection –Link with other services

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 Successful micro insurance (2) Clearly defined products Rapid service Community verification of claims –Health Appropriate treatment protocols Health promotion and prevention Data base to help manage Underwriting the community and insurance

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 Other forms Microtakaful

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 Key to micro insurance success Distribution system Affordable quality care Efficient management

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 What you can learn Creating efficient organizations Creative solutions Understand real service issues Development opportunity for your staff TRANSFORM YOUR UNDERSTANDING OF INSURANCE AND MANAGEMENT

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2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007