Topic micro insurance

Presenters Roll No.

Sejal Chawda 501
Urvi Gada 505
Niyati Gala 506
Dixita Parmar 520
Kinjal Shah 528


Submitted to Prof. Poonam Shah
Submitted on 25
th
June, 2014



















MICRO INSURANCE

Meaning
Insurance Regulatory and Development Authority (IRDA) has created a special category of
insurance policies called micro-insurance policies to promote insurance coverage among
economically vulnerable sections of society. The IRDA Micro-insurance Regulations, 2005
defines and enables micro-insurance.
Definition by Investopedia
Insurance products that offer coverage to low-income households. A micro insurance plan
provides protection to individuals who have little savings and is tailored specifically for
lower valued assets and compensation for illness, injury or death.
A micro-insurance policy is:
A general or life insurance policy with a sum assured of Rs 50,000 or less
A general micro-insurance product is any:
Health insurance contract
Any contract covering belongings such as
Hut
Livestock
Tools or instruments or
Any personal accident contract
They can be on an individual or group basis
A life micro-insurance product is:
A term insurance contract with or without return of premium
Any endowment insurance contract or
A health insurance contract
They can be with or without an accident benefit rider and
Either on an individual or group basis
There is flexibility in the regulations for insurers to offer composite covers or package
products that include life and general insurance covers together
Intermediaries:
Micro- insurance business is done through the following intermediaries:
Non-Government Organisations
Self-Help Groups
Micro-Finance Institutions




Salient Features of Micro Insurance:
1) USAGE: Though no figures are available on the exact size of the micro insurance market
in India, a rough estimate would place it at around 14m individuals, or approximately 2% of
the adult population. The low take-up can be ascribed to a general lack of awareness of
insurance as a financial product, even in the high to middle-income market (a factor that
emerged strongly from the focus group findings). In addition a lack of rural financial services
infrastructure for distribution purposes, as well as a lack of actuarial data, inhibits the
development of the micro insurance market.
2) PLAYERS: Though the state-owned insurers still have the largest market share, there
are now a total of 32 licensed insurers. A feature that sets India apart from other countries is
the fact that micro insurance is mostly provided by large, corporate insurers. This is due to a
cautious regulatory approach in response to the fact that small and cooperative financial
institutions have not performed well historically that limits the players in the non-bank field
to large cap institutions. The cooperative/mutual sector therefore does not feature as a
provider of micro insurance, though corporate insurers use it as a distribution channel.
Informal insurance is virtually exclusively the domain of formal entities such as health
insurance schemes not registered for insurance purposes, rather than community risk-pooling
groups, and is estimated to only comprise 20% of the market.
3) PRODUCTS: Micro insurance in India is for the most part driven by compulsory credit
life insurance on the back of microfinance. Due to the limited reach of the public health
system, there is also a high natural demand for health insurance. Many MFIs therefore
provide a package of compulsory insurance cover to their clients that are credit-linked this
includes life, asset as well as health insurance. The cover is for the term of credit (usually 1
year). Health cover provided in such packages is not comprehensive and it covers only
certain listed diseases for which hospitalization is required. Accident cover is a rider on life
insurance and is a fixed payout. India is therefore fairly unique in that compulsory insurance
cover extends beyond life cover. It is estimated that only 10% of micro insurance policies are
sold on a voluntary basis. Of these, up to 90% are endowment products rather than pure risk
products, indicating a preference among the low income population for financial products
that provide some payout regardless of whether a risk event has occurred.
4) DISTRIBUTION: Distribution is an important part of the micro insurance landscape in
India. Regulations were issued in 2005 to create a micro insurance agent category for the
dedicated distribution of micro insurance. Currently such agents however only distribute
about 20% of all micro insurance. Instead, distribution mainly takes place through MFIs who
either do not qualify as micro insurance agents under the regulations or who find the
regulations too restrictive, as partners or agents of formal insurers. We can distinguish four
institutional models for providing micro insurance which help us to understand how corporate
insurers, government bodies as well as other institutions, such as microfinance institutions
(MFIs) can play a role.





MAJOR PLAYERS IN MICRO INSURANCE
1. Life Insurance Corporation of India (LIC)
Life Insurance Corporation of India (LIC) was established on 1 September 1956 to spread the
message of life insurance in the country and mobilise peoples savings for nation-building
activities. LIC with its central office in Mumbai and seven zonal offices at Mumbai, Calcutta,
Delhi, Chennai, Hyderabad, Kanpur and Bhopal, operates through 100 divisional offices in
important cities and 2,048 branch offices. LIC has 5.59 lakh active agents spread over the
country. The Corporation also transacts business abroad and has offices in Fiji, Mauritius and
United Kingdom. LIC is associated with joint ventures abroad in the field of insurance,
namely, Ken-India Assurance Company Limited, Nairobi; United Oriental Assurance
Company Limited, Kuala Lumpur; and Life Insurance Corporation (International), E.C.
Bahrain. It has also entered into an agreement with the Sun Life (UK) for marketing unit
linked life insurance and pension policies in U.K. In 1995-96, LIC had a total income from
premium and investments of $ 5 Billion while GIC recorded a net premium of $ 1.3 Billion.
During the last 15 years, LIC's income grew at a healthy average of 10 per cent as against the
industry's 6.7 per cent growth in the rest of Asia (3.4 per cent in Europe, 1.4 per cent in the
US). LIC has even provided insurance cover to five million people living below the poverty
line, with 50 per cent subsidy in the premium rates. LIC's claims settlement ratio at 95 per
cent and GIC's at 74 per cent are higher than that of global average of 40 per cent.
Compounded annual growth rate for Life insurance business has been 19.22 per cent per
annum.

The introduction of private players in the industry has added to the colours in the dull
industry. The initiatives taken by the private players are very competitive and have given
immense competition to the on time monopoly of the market LIC. Since the advent of the
private players in the market the industry has seen new and innovative steps taken by the
players in this sector. The new players have improved the service quality of the insurance. As
a result LIC down the years have seen the declining phase in its career. The market share was
distributed among the private players. Though LIC still holds the 75% of the insurance sector
but the upcoming natures of these private players are enough to give more competition to LIC
in the near future. LIC market share has decreased from 95% (2002-03) to 82 %( 2004- 05).
2. ICICI Prudential Life Insurance Company Ltd.
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier
financial powerhouse and prudential plc, a leading international financial services group
headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector
insurance companies to begin operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA). The company has a network of about
56,000 advisors; as well as 7 banc assurance and 150 corporate agent tie-ups.
3. Birla Sun Life Insurance Company Ltd.
Established in 2000, Birla Sun Life Insurance Company Limited (BSLI) is a joint venture
between the Aditya Birla Group, a well known and trusted name globally amongst Indian
conglomerates and Sun Life Financial Inc, leading international financial services
organization from Canada. The local knowledge of the Aditya Birla Group combined with the
domain expertise of Sun Life Financial Inc., offers a formidable protection for its customers
future.
4. Tata AIG Life Insurance Company Ltd.
Tata AIG Life Insurance Company Ltd. "Tata AIG Life" offers a broad array of life insurance
products to individuals, associations and businesses of all sizes, with a wide variety of
additional coverage to ensure our customers can find an insurance product to meet their
needs.
Tata AIG Life is a joint venture of the Tata Group and American International Group, Inc.
(AIG). They operate in 11 states with a specific relationship management team for each state.
A dedicated & trained sales and marketing team manages the front end of the Micro
insurance program. Our micro insurance distribution model collaborates with NGOs (Non-
governmental organisations) and rural organizations with community level SHG (Self Help
Group) women advisors who provide insurance advisory services to the rural customers at
their doorstep.
5. SBI Life Insurance Company Ltd.
SBI Life Insurance Company Limited is a joint venture between the State Bank of India and
BNP Paribas Assurance. SBI Life Insurance is registered with an authorized capital of Rs
2000 crores and a Paid-up capital of Rs 1000 Crores. SBI owns 74% of the total capital and
BNP Paribas Assurance the remaining 26%. State Bank of India enjoys the largest banking
franchise in India. Along with its 6 Associate Banks, SBI Group has the unrivalled strength
of over 16,000 branches across the country, arguably the largest in the world. SBI Life has a
unique multi-distribution model encompassing vibrant Banc assurance, Retail Agency,
Institutional Alliances and Corporate Solutions distribution channels. SBI Life extensively
leverages the SBI Group as a platform for cross-selling insurance products along with its
numerous banking product packages such as housing loans and personal loans. SBIs access
to over 100 million accounts across the country provides a vibrant base for insurance
penetration across every region and economic strata in the country ensuring true financial
inclusion.
6. ING Vysya Life Insurance Company Private Ltd.
ING Vysya Life Insurance (ING Life), a part of the ING Group the worlds largest financial
services corporation entered the private life insurance industry in India in September 2001.
Headquartered at Bangalore, ING Life India is staffed by over 6,000 employees and services
more than 10 lakhs customers. ING Life India is a joint venture between ING Group (ING
Insurance International B.V.) & Exide Industries. ING Life has a pan India network, and
distributes its products through two channels, the Tied Agency Force and the Alternate
Channel. The Tied Agency force comprises of over 60,000 ING Life Advisors spread across
the country. The channel has branches in 234 cities, and 366 sales teams across the country.
The Alternate Channels business within ING Life is one of the fastest growing distribution
channels. The company currently has tie ups with over 200 cooperative bank across the
country. The Alternate Channels division has Banc assurance (ING Vysya Bank), Referral
Banks, Corporate Agents, Brokers and SMINCE.
7. Allianz Bajaj Life Insurance Company Ltd.
Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest Insurance
Company and Bajaj Fiserv. Allianz SE is a leading insurance conglomerate globally and one
of the largest asset managers in the world, managing assets worth over a Trillion (Over INR.
55, 00,000 Crores). Allianz SE has over 115 years of financial experience and is present in
over 70 countries around the world.
8. MetLife India Insurance Company Pvt. Ltd.
MetLife India Insurance Company Limited (MetLife) is an affiliate of MetLife, Inc. and was
incorporated as a joint venture between MetLife International Holdings, Inc., The Jammu and
Kashmir Bank, M.Pallonji and Co. Private Limited and other private investors. MetLife is
one of the fastest growing life insurance companies in the country. It serves its customers by
offering a range of innovative products to individuals and group customers at more than 600
locations through its bank partners and company-owned offices. MetLife has more than
50,000 Financial Advisors, who help customers achieve peace of mind across the length and
breadth of the country.
9. Aviva Life Insurance Company India Limited
Aviva India is a joint venture between one of the countrys oldest and largest groups, Dabur,
and Aviva plc, the UK's largest insurance group, whose association with India dates back to
1834. With a strong sales force of over 30,000 Financial Planning Advisers (FPAs), we have
initiated and pioneered many innovative sales approaches, including the concept of Banc
assurance and Financial Health Check services. We are among the first companies to
introduce the contemporary unit- linked products with a wide distribution network of 195
branches and close to 40 Banc assurance partnerships; we are spread across nearly 3,000
towns and cities in India.
10. Sahara India life insurance
The Sahara Pariwars latest foray is in the field of Life Insurance. The Pariwars life
insurance company Sahara India Life Insurance Company Ltd. - has been granted licence
by the insurance regulator the IRDA on 6th February 2004. With this approval Sahara India
Life Insurance Company Ltd. becomes the first wholly and purely Indian company, without
any foreign collaboration to enter the Indian Life insurance market. The launch is with an
initial paid up capital of 157 crores. The Chairman of the company is Shri Subrata Roy
Sahara who is also the Chairman of Sahara Pariwar.
11. Shriram life insurance company
Shriram Life Insurance Company is the joint venture between the Shriram Group and the
Sanlam Group. The Shriram Group is one of the largest and well-respected financial services
conglomerates in India. The Group's main line of activities in financial services include chit
fund, truck financing, consumer durable financing, stock broking, insurance broking and life
insurance. The Group has a customer base of 30 lacs chit subscribers and investors and
operates through a network of 630 offices all over the country. The Group has the largest
agency force in the private sector consisting of more than 75,000 loyal and dedicated agents.

12. IDBI Fortis Life Insurance Company Ltd.
IDBI Fortis Life Insurance Co Ltd is a joint-venture of IDBI Bank, Indias premier
development and commercial bank, Federal Bank, one of Indias leading private

PRODUCTS
Bajaj Allianz Alp Nivesh Yojana
An endowment plan with Life cover and Maturity benefit equal to sum assured + vested
bonus.
Life cover and Maturity benefit equal to sum assured + vested bonus
Guaranteed Surrender Value.
Avail additional benefits including Accidental Death Benefit & Accidental Permanent
Total / Partial Disability Benefit.
Bajaj Allianz Jana Vikas Yojana
A single premium plan with maturity benefit of 125% of the single premium payable on
survival till the end of the policy term.
Life Cover.
Maturity Benefit of 125%of the single premium payable on survival till the end of the
policy term.
Guaranteed Surrender Value.
Bajaj Allianz Saral Suraksha Yojana
The Most economical term insurance policy with return of premium on maturity.
Return of premium on maturity
Guaranteed Surrender Value
Avail additional benefits including Accidental Death Benefit & Accidental Permanent
Total / Partial Disability Benefit
AVIVA Lifes Grameen Suraksha
A micro-insurance rural term insurance plan for BASIX customers. This traditional term
plan has been developed with the objective of giving the rural policyholder maximum
benefits.
The policyholder pays premium for a period of just two years and then avails the term
benefit for 5 or 10 years
The minimum sum assured is Rs 5,000 and the maximum is Rs 50,000.
In addition, tax benefits can be availed as per Section 80C of the Income Tax Act, 1961. .
BSLI Bima Dhan Sanchay
A Win-Win Situation Security plus Guarantee. The refund of premiums paid by you is
guaranteed with 3 maturity options.
Sum Assured Rs.5, 000/- to Rs.50, 000/-
Maximum Maturity age 65 years
A grace period of 180 days from the premium due date will be available to you
An option for additional Sum Assured is available provided the base sum assured is
minimum Rs 10,000/- and the sum assured under the rider should not exceed the sum assured
under the base product if the death occurs due to accident
BSLI Bima Suraksha Super
BSLI Bima Suraksha Super provides you life insurance cover for which you have to pay
regular premium. The nominee gets the sum assured in the unfortunate event of death.
BSLI Bima Suraksha Super provides you life insurance cover for which you have to pay
regular premium. The nominee gets the sum assured in the unfortunate event of death.
Your premium depends on your age, gender, Sum Assured and benefit period chosen.
At maturity, there is no benefit payable.
An option for additional Sum Assured is available provided the base sum assured is greater
than or equal to 10,000/- if the death occurs due to accident.
ICICI Pru Sarv Jana Suraksha
ICICI Prudential Life Insurance presents its first Micro Insurance Plan - Sarv Jana Suraksha
especially designed for rural population which provides total security to you and your family,
at very affordable cost.
Min / Max entry age-18 years - 55 years
Min/Max Sum Assured- Rs. 5,000 -Rs. 50,000
Policy Term -5 years Cover ceasing age -60 years
SBI Life insurances Grameen Super Suraksha and Grameen Shakti
SBI Life insurances Grameen Super Suraksha and Grameen Shakti products have been
designed to meet the requirements of the weaker sections of the rural population. Grameen
Super Suraksha is a micro insurance pure term product and Grameen Shakti is micro
insurance product with ROP. Grameen Shakti is a dual benefit life insurance product to safe
guard the group member which provides Protection with maturity benefit at affordable rates.
It offers to the Family of the group member Protection & it offers to the Group
member survival Benefit.
Duration of plan: 5 years or 10 years as per the Group Master Policyholders choice.
Age at entry: Minimum 18 years age last birthday.
Maximum 50 years age last birthday.
Sum assured: Rs.5, 000/- to Rs.50, 000/- (in multiples of 5,000) as per choice of Master
Policyholder.
Premium frequency: Yearly.
Requirement from the Group member: Automatic acceptance linked to signature of
Membership form that includes Good health declaration and nomination clause.
Death Benefits: First 45 days after the cover start date or after the revival date No death
claim will be accepted (inclusive of accidental death) Form 46th day from cover start date /
revival date Sum assured is payable
Tata AIG Life Sumangal Bima Yojana
In this plan you have to pay premium for 10 years and you get insurance protection for 15
years. Enjoy total guaranteed returns of 120% of the *total policy premium at specified
intervals during term of the policy.
Policy Term: 15 years
Premium Paying term: 10 years
Coverage Limits: Minimum Death Benefit (Sum Assured): Rs.5, 000/- Maximum Death
Benefit (Sum Assured): Rs.30, 000/-
Premium payment frequency: Monthly, quarterly, half yearly & yearly.
Survival Benefit: We shall pay you the survival benefits as below, if you have paid all due
premiums.
Tata AIG Life Sampoorn Bima Yojana
A low cost insurance plan where the policyholder receives all the premiums paid during the
policy term upon survival until the term of the policy. Premiums are payable for only 10
years, while the coverage is up to 15 years.
Policy Term: 15 years
Coverage Limits: Minimum Death Benefit (Sum Assured): Rs.5, 000/-
Maximum Death Benefit (Sum Assured): Rs.50, 000/-
Premium payment frequency: Monthly, quarterly, half yearly & yearly
Death Benefit: Sum assured is paid to the policyholders nominee
Maturity benefit: At the end of the 15 years, all the premiums paid will be returned to the
policyholder.
Tata AIG Life Navkalyan Yojana
A regular premium payment, low cost term plan for the rural adults who seek life insurance
protection without any maturity benefit.
Policy Term: 5 years
Coverage Limits: Minimum Death Benefit (Sum Assured): Rs.5, 000/-
Maximum Death Benefit (Sum Assured): Rs.50, 000/-
Premium payment frequency: Monthly, quarterly, half yearly & yearly
Death Benefit: Sum assured to the policyholders nominee
Maturity benefit: None
Rider: Option to attach Accident Death Benefit Rider for issue ages 18 to 55 years at a
nominal extra charge.
IDBI Fortis Group Micro insurance Plan
The first of its kind group that will be benefited by this unique plan is Samhita Community
Development Services, announced officially by IDBI Fortis Life Insurance Co Ltd at a press
conference held at Bhopal today. This tie-up will insure 13,356 poor members for a Sum
Assured of over Rs. 7cr in the rural and urban areas of Madhya Pradesh. The plan provides
affordable life insurance cover to groups offering great value to Micro Finance Institutions,
Self-Help Groups and NGOs. Not only does the plan insure the lives of their group members
and thus provide security to the group members families, it can also be used for providing
protection from loan liabilities in the unfortunate event of the death of the main bread-winner.
Aviva Grameen Suraksha
Grameen Suraksha is a life insurance plan that helps you protect your family's future. While
there can be no compensation for the loss of life, Grameen Suraksha ensures that their
financial needs are met when something unfortunate happen to you.
Entry Age: 18 to 45 years
Policy Term: 5 and 10 years
Premium Paying Term: 2 years (payable in yearly mode only)
Sum Assured: Rs. 5,000 to Rs.50, 000 (in multiples of Rs. 5,000 only) A grace period of
one month is allowed for payment of premium.
LIC's Jeevan Madhur
Jeevan Madhur, is available to both male & female without any medical examination and is
a simple saving related life insurance plan covering individuals in the age group of 18 to 60
years. Minimum sum assured under the plan is Rs. 5000 and maximum sum assured is Rs.
30000. Mode of payment of premium can be even weekly/fortnightly in addition to other
regular modes to suit the needs of people with low income. Minimum premium is Rs. 25/- per
week, Rs. 50/- per fortnight, Rs. 100/- per month which is expected to be well within reach of
the targeted group. The term of policy ranges between 5 to 15 years. The policy, if kept in
full force, is entitled to the simple reversionary bonuses depending upon Corporations
experience. Accident benefit is also applicable as per terms and conditions of the policy.
After premiums are paid for 2 years, Auto Cover facility i.e., continuance of cover even in
case of inability to pay premium up to 2 years from the date of First Unpaid premium is
available to take care of contingencies and uncertainties of income.
LIC's Jeevan Mangal
A term assurance plan with return of premiums paid on maturity. The Micro Insurance Plan
Jeevan Mangal launched today is a term assurance plan with return of premium on maturity
providing for a sum assured (risk cover) ranging from minimum of Rs.10, 000/- to maximum
of Rs.50, 000/- with an optional accident benefit rider, together providing for total death
benefit equal to double the sum assured, on death due to accident
Met Vishwas
It is a life insurance plan that protects you in case of death at a nominal cost when you
survive the term of the policy you get back up to 125% of premium (in case of coverage term
10 years) Maturity benefit: 110% of the single premium paid for a 5 year coverage term
125% of the single premium paid for a 5 year coverage term
Entry Age: 18 to 60years Policy Term: 5 or 10 years Premium Paying Term: 2 years
(payable in yearly mode only) Sum Assured: Rs. 5,000 to Rs.50, 000 (in multiples of Rs.
5,000 only) A grace period of one month is allowed for payment of premium.
SUD Life Paraspar Suraksha Plan
The scheme has been specifically designed for the weaker sections of the society and those
from the rural areas. The scheme covers the groups of 200 and or members. The scheme is to
provide life cover at low cost to groups of persons engaged in a common economic activity
like those financed by an NGO, MFI or Banks in rural or urban areas. Entry Age: 18 to
50years Group size: minimum-100, maximum no limit Premium Paying Term:
Minimum premium- single premium-162.50, annual premium-33.50 Maximum premium-
single premium-1625.0, annual premium-335.0 Sum Assured: Rs. 5,000 to Rs.50, 000 (in
multiples of Rs. 5,000 only)
DELIVERY OPTIONS
i) Partner Agent Model:
Commercial or public insurers together with MFIs or nongovernmental organizations
(NGOs) collaboratively develop the product. The insurer absorbs the risk, and the MFI/NGO
markets the product through its established distribution network. This lowers the cost of
distribution and thus promotes affordability. This model of collaboration has become the
dominant approach to micro insurance in India and has encouraged many microfinance
institutions to switch from a full-service model to the partner-agent model. Examples of this
scheme are AIDMI's Afat Vimo as well as SEWA, a micro insurance pioneer, who offers its
life, health and asset coverage in partnership with various insurers.
ii) Community based Model:
A group of people or local communities, MFIs, NGOs and/ or cooperatives develop and
distribute their own product, manage the risk pool and absorb the risk. The Swayamkrushi
Youth Charitable Organisation (YCO) in Andhra Pradesh is an example of a community-
based model. It is primarily a savings and credit association with added insurance features.
The cooperative's 8,100 members pay a yearly premium of Rs. 100 into a pool managed by
the cooperative and receive cover for death and property loss. The life insurance benefit is
Rs. 15,000 for a natural death and Rs. 30,000 in the event of an accidental death.
iii) In the in-house or full-service model:
A MFI or NGO runs its own insurance scheme for its clients and any profit or loss is
absorbed by the MFI. The system is not very common anymore but it still exists in some
organizations such as SPANDANA, located in Guntur, Andhra Pradesh. This scheme started
in urban areas and then moved to rural ones and has expanded enormously in recent years.
iv) Provider model:
Banks and other providers of microfinance can directly offer or require insurance contracts.
These are usually coupled with credit, for example, to insure against default risk. This model
is used widely in the general insurance market but high transaction costs and low ability to
pay premiums inhibit its extensive use in the field of disaster insurance for the poor.

RECENT DEVELOPMENT AND CHALLANGES
The dynamic micro insurance sector has changed dramatically in recent years, with many
encouraging results.
Growth: Today micro insurance covers half a billion risks, up from 135 million in
2009, largely due to collaboration with national governments, but also because of
more active interest by commercial insurers. In 2011, 33 of the worlds 50 largest
insurance companies offered micro insurance, up from just seven in 2005.
New delivery channels: Growth is partly attributed to the emergence of
alternative delivery channels including retailers, utility and cell phone companies,
cooperatives, and labour unions which provide new access points to reach the low-
income market.
Demonstrated business case: Micro insurance can be profitable under certain
circumstances. Group insurance schemes are generally viable, as are products that are
bundled with other services (e.g. loans, mobile phone minutes or fertilizer). It is more
difficult for voluntary insurance to generate a surplus, particularly when covering
health and agricultural risks.
Impact: Research has demonstrated a positive impact of insurance on the lives of
the poor and, more broadly, in their communities. For instance, health insurance can
reduce out-of-pocket expenditure and increase use of health services. Property
insurance, on the other hand, allows entrepreneurs to take more risk and invest more
in their businesses. Furthermore, various studies demonstrate a causal link between
the development of the insurance industry and national economic development by
putting a price on risk and supporting entrepreneurship. Indeed, it is not possible to
have meaningful social and economic development without insurance.
Despite recent developments, the insurance industry in many countries is not achieving its
potential. Millions of poor households still lack access to good-value products. The
unwillingness of insurers to participate in emerging markets has significant ramifications for
the insurance industry itself as well as the global economy. A range of challenges and market
failures still inhibit the development of inclusive insurance markets.
Patchy progress: Micro insurance is developing rapidly in countries such as India,
South Africa, and the Philippines, serving tens of millions of low-income households.
Outreach in many other developing countries remains meagre. There is an urgent need
to accelerate the development of many more markets.
More innovation: Even in mature markets there remains significant scope for
innovations to enhance efficiency, expand outreach, provide better benefits, and pay
claims quickly.
Reinventing the wheel: The lessons and experiences most evident in mature
markets are slow to reach practitioners elsewhere. Consequently, market development
is protracted as practitioners often repeat the same mistakes.
Regulation and policy: The regulatory environment in many countries is not able
to accommodate innovative products or alternative distribution channels.
Specialized expertise: More skilled insurance professionals who understand the
needs and preferences of the working poor are needed.
Financial literacy: To stimulate demand, it is necessary to help the poor
appreciate the value of insurance.
Given these challenges, a more holistic approach involving the full range of stakeholders is
needed: this is where the work of the Micro insurance Innovation Facility fits in.