Microinsurance and MFIs

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    03-Jan-2016
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Microinsurance and MFIs. Craig Churchill Microinsurance Innovation Facility International Labour Organization. Outline of the presentation. Should an MFI offer microinsurance? If so, through what institutional structure? - PowerPoint PPT Presentation

Transcript of Microinsurance and MFIs

Slide 1If so, through what institutional structure?
If they partner with an insurance company, how to manage that relationship effectively?
What products should the MFI offer?
Concluding thoughts
Commercial
Social
Improve client welfare
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Inefficient or expensive way of addressing the risk of client death
Requires a different skill sets from savings and credit
Do not want to be distracted from core competencies
Wise to separate credit and insurance risks
Possible reasons for not offering insurance:
1. Should MFIs offer insurance?
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Reinsurer
and technical assistance
Partner-agent model
Microinsurance broker
Tell them what you want
Choose a trustworthy insurer
Manage claims*
Eliminate exclusions
4. Products
Credit life
Perhaps the best opportunity to expose large number of low-income people to insurance
It is a lost opportunity if they did not know that they were covered, or if they had a bad experience with the product
It needs to cover more than just the loan to increase the chances that policyholders will have a positive experience with it
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More efficient to “piggyback” insurance transaction onto another transaction
Link with credit limits value because people do not always want to be in debt
Links with savings have high potential
Does the MFI want to develop the capacity to deliver stand-alone insurance products?
4. Products
Often the product for which there is the greatest demand
Illnesses can cause a significant problem for the MFI’s loan portfolio
If MFIs do offer health, perhaps focus on more basic products like hospital cash
Can MFIs offer health savings accounts for small, frequent health expenses?
4. Products
MFIs should consider their broader insurance needs when negotiating with insurers
If frontline employees have the same coverage, it will be easier for them sell it to clients
Other coverage to consider: vehicles, property, fidelity, money storage and handling
4. Products
Develop in-house expertise
Actively manage their microinsurance scheme, even in a P-A model, because their reputation is at risk
Consider how ensure that low-income households appreciate insurance and are willing to pay for additional benefits
Persuade front line staff that insurance provides value for clients and the MFI
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www.e-mfp.eu