How can we extend financial products and services, like microinsurance, to low-income consumers at scale? In theory, “low touch” sales and services can reach large numbers of people at low cost. But so far, attempts to enroll new customers without active sales efforts have largely failed. As a result, “high touch” sales and distribution channels are seen as necessary to convince low-income consumers to purchase financial products, especially unfamiliar and complex ones such as microinsurance. But these high touch channels may incur costs that the small premium revenues struggle to cover.
Is it too soon to dismiss low touch methods? Can a balance be struck that provides the information, support, and “touch” level that encourages clients to buy, while keeping distribution costs in check? Read More
This blog post is co-written with Barbara Magnoni and Laura Budzyna.
Do clients get value from microinsurance? This was a straightforward question asked of the MILK Project over three years ago. And as the Project comes to an end, we have come up with a perhaps uninspiring answer: Sometimes. But keep reading- the inspiration is in the nuance . . . Read More
Over the past three years, I have been working on the Microinsurance Learning and Knowledge (MILK) Project, focusing on one specific question: Do clients obtain value from microinsurance? As the project comes to an end, I feel more and more that this is only one of the many questions that we should be asking as we think about how low-income people cope with risk and financial shocks. Insurance is one of many coping strategies; it is not always the quickest, the easiest, or the most accessible. But it is an important complement, and in some cases, can take the “bite” out of some of more difficult strategies such as selling assets, borrowing at high interest rates or drying up savings . . . Read More
When Dr. Martin Hintz of Allianz asked industry stakeholders gathered in Manila in November 2010 for the 6th Munich Re Foundation and Microinsurance Network Annual Microinsurance Conference if their microinsurance programs were profitable only a handful of the hundreds of practitioners in the audience raised their hands.
Why were there so few positive responses? Microinsurance is widely assumed to have great potential to be profitable for insurers and delivery channels, but we know little about when a business case actually exists. Like microcredit, microinsurance is often seen as an opportunity to tap into a large new market at the base of the pyramid. Under what circumstances can the unique and often costly challenges faced by microinsurance in product design, marketing, delivery, and claims administration be overcome? The MILK project is attempting to answer these questions.and help gain a better understanding of when and how a business case for microinsurance exists for insurers and delivery channels.. Read More
This post is the first of a two-part series by Michael J. McCord, Project Director of MILK and the President of the MicroInsurance Centre, and Emily Zimmerman, a Research Associate at MILK. Part 2 will cover address the business case for microinsurance.
Do clients really benefit from microinsurance? Microinsurance, a younger sibling of microcredit is in a relatively nascent phase, yet it has caught the attention of governments, donors, practitioners and even investors worldwide with promises of helping people manage risks and reduce the financial burden when a shock occurs. However, poor people have been using a wide variety of both formal (such as credit, savings, and cash transfers) and informal (burial groups, family and community networks) tools to cope with risk for ages. The Microinsurance Learning and Knowledge (MILK) project seeks to understand what, if anything, microinsurance adds to these other tools. Our first step in this process consisted of clearly defining value and conducting a landscape review of existing studies that have asked questions about value. The process showed that we actually know quite little about the value microinsurance has for poor clients. Over the next three years, MILK will implement original and collaborative research to begin to fill the many gaps that remain in our understanding of value . . . Read More
The vast majority of microfinance programs -- particularly group lending efforts -- explicitly target women. This focus grew in part out of the belief, supported by some research, that women are more likely to invest in the household as a whole, particularly in the children. Given that, what can we do to improve women’s financial self-sufficiency, either through employment, entrepreneurial success or thoughtful risk management tools?
Barbara Magnoni, President of EA Consultants, a development consultancy that advises on microfinance product design, thinks we could start by taking a more differentiated view of men and women as microfinance customers . . . Read More