Microinsurance: Links to Occupational Safety & Health Workshop for OSH through provision of MI, MF & Banking Services Cairo, Egypt – December 2009 Jeanna Holtz The Microinsurance Innovation Facility International Labour Organization, Geneva

Overview of Microinsurance Presentation 1.What is microinsurance? 2.Evolution & trends 3.Product development 4.Closing thoughts-way forward

Microinsurance is… “…a mechanism to protect low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved” Microinsurance is not… Regular insurance products with smaller sums insured and premiums Small insurance companies Just another product offered by MFIs Savings, credit, risk prevention Definition

Characteristics of the insurable poor Often work in the informal economy Irregular cash flows Manage risks through myriad of informal means, including social networks Limited familiarity with formal insurance May not trust insurance companies Vulnerable to risks… Valuable, effective MI considers these characteristics

Conventional InsuranceMicroinsurance Complex policy document Limited eligibility with standard exclusions Regular premium payments as banking transaction Screening requirements may include a medical examination Large sums insured, longer terms Priced based on age/specific risk Agents and brokers are primarily responsible for sales Market is largely familiar with insurance Simple, easy to understand policy document Broadly inclusive, with few if any exclusions Premiums accommodate irregular cash flows, paid in cash or with another financial transaction Any screening requirements would be limited to a declaration of good health Small sums insured, often short terms Community or group pricing Distribution channel may manage the customer relationship, premium collection, claims payment Market is largely unfamiliar with insurance Micro vs. Conventional Insurance Adapt to needs of target market

Microinsurance roots Expansion of Microfinance Extension of social protection Business opportunity by insurers Popular insurance by cooperatives Micro- insurance Investor interest

Microinsurance trends MI emerging out of the shadow of microfinance: business and social impact Greater variety of distribution channels Growing interest from policymakers, regulators and insurance companies Increased focus by investors; some evaluate social dimensions Product innovations that provide better coverage to more low-income people Increasing experimentation with consumer education on risk management and insurance

2009 Survey results 14.7 million people in Africa with microinsurance USD 257 million in premiums received in % of the population living under USD 2 per day

Microinsurance product spectrum Credit life Term life/Personal accident Savings life Property insurance Endowment life Agriculture Health insurance Difficulty & demand Success Products in greatest demand are least available 3. Products

Getting Started Start simple: –Life insurance, linked to loans, easy point of entry –Also: accident, disability Potential add-ons (later): income replacement, critical illness, hospitalisation cash… –Example: Microfund for Women, Jordan Caregiver product: covers certain costs during illness episode

Considerations to develop Microinsurance Partnership with insurer, other stakeholders Eligibility –Mandatory or voluntary Piggyback or standalone Premium collection timing and mechanism Benefit design Claims payments Client & employer education Risk management and controls –Important for accident cover

Checklist for workplace microinsurance Medium to large organizations (volume); growing Accidents and deaths are frequent, volatile Win-win for insurer/channel, employer and employees Efficient distribution (easy access) Low transaction costs (enrolment, premium collection, claims) Simple, valued product

Benefits of Microinsurance, Microfinance & Decent Work: SOCIAL Better jobs, safer workplace Protection when accidents occur Employee Loyalty Socially responsible Improved access to financial services COMMERICIAL Higher loan repayment Profitable business venture Increased productivity Lower absenteeism Employee retention Attract capital Closing Thoughts

Closing Thoughts, cont. Successful products: –Overcome the wariness of customers –Adapt to the socio-economic situation of the poor –Create an insurance culture –Consider social dimensions Scale up, by: –Start small: Build client interest and trust; organizational competency –Leverage existing distribution channels such as MFIs (efficiency!) –Build on lessons learned –Innovate; add value to products Increase Income Build Assets Manage Risks Risks: Accidents, Illness, Death, Property Loss, Disasters… Innovation will drive development

Thank you! Jeanna Holtz For more information: or Tel

Extra slides

Learning about microinsurance Conducted 24 case studies, which draw lessons from 40 microinsurance providers, including risk carriers and delivery channels, primarily in Africa, Asia and Latin America Case studies are available on Published “Protecting the poor: A microinsurance compendium” with Munich Re Foundation