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This Landscape Paper reviews the large body of writings and conference presentations on microinsurance to try and determine whether the business case for this new industry has been made. The conclusion, in short, is that it hasn’t. Beyond compulsory credit life schemes, the authors have struggled to find a single well-documented case of a microinsurance enterprise that is profitable at scale.

This document was prepared by the IAIS-MicroInsurance Network Joint Working Group on Microinsurance in consultation with IAIS Members and Observers and the Access to Insurance Initiative. An IAIS survey identified Mutuals, Cooperatives and other Community-based Organisations (MCCOs) do play an important role to improve the effective provision of insurance services in some jurisdictions to groups of the population that would otherwise be underserved or not served at all. In 2008, cooperative and mutual insurance accounted for 24% percent of the total formal insurance market globally writing over one trillion USD in premiums, with substantial market shares in many countries. Although the paper is focused on MCCOs with respect to improving access to insurance for those that are underserved, it is recognized that such insurers can also become large, and can exist in markets providing the full range of both retail and commercial products and services to a broad range of clients. This paper has been developed to advance discussion on the appropriate and effective regulation and supervision of MCCOs.

Development experts now recognize the intimate relationship between the lack of insurance and the persistence of poverty. But the challenges in reducing risk are great. Insurance markets are characterized by problems of high transactions costs, moral hazard, adverse selection, low education levels of clients, and weak enforcement mechanisms. This paper outlines lessons from economics and describes innovations in credit-life insurance, health insurance, and weather insurance.