MICROINSURANCE IN COLOMBIA: Lessons and ?· MICROINSURANCE IN COLOMBIA: Lessons and Challenges ... Lottery…

Download MICROINSURANCE IN COLOMBIA: Lessons and ?· MICROINSURANCE IN COLOMBIA: Lessons and Challenges ... Lottery…

Post on 01-Jul-2018

213 views

Category:

Documents

0 download

Embed Size (px)

TRANSCRIPT

<ul><li><p>MICROINSURANCE IN COLOMBIA:Lessons and Challenges</p><p>FPD WEEK 2010</p><p>Washington D.C March 4 - 2010</p><p>1/37</p></li><li><p>1. Low Income Markets Vs. Traditional Insurance Markets</p><p>2. Development of Microinsurance Market in Colombia</p><p>3. Distribution Channels</p><p>4. Microinsurance for Familias en Accin and Red Juntos</p><p>Content</p><p>2/37</p></li><li><p>Low Income Markets Vs. Traditional Insurance Markets</p><p>Different Client Product and Distribution Characteristics</p><p>3/37</p></li><li><p>Line of Poverty</p><p>Source: DNP 2006. MERPD ENH y ECH</p><p>55,755,1</p><p>53,8</p><p>50,4</p><p>45,1</p><p>44,0</p><p>46,0</p><p>48,0</p><p>50,0</p><p>52,0</p><p>54,0</p><p>56,0</p><p>58,0</p><p>2002 2003 2004 2005 2006</p><p>Had fall 11 points20,3 </p><p>Millions</p><p>4/37</p></li><li><p>21,6</p><p>18,8 19,0</p><p>15,4</p><p>12,012,0</p><p>14,0</p><p>16,0</p><p>18,0</p><p>20,0</p><p>22,0</p><p>24,0</p><p>2002 2003 2004 2005 2006</p><p>Line of Extreme Poverty</p><p>Had fall 10 points5,4 </p><p>Millions</p><p>Source: DNP 2006. MERPD ENH y ECH5/37</p></li><li><p>Source: Living Standards Measurement Study Survey, 2003</p><p>The Poor Are More Vulnerable to Risks</p><p>1 1</p><p>1</p><p>22</p><p>2</p><p>3 3</p><p>3</p><p>44</p><p>4</p><p>5</p><p>5</p><p>5</p><p>0%</p><p>5%</p><p>10%</p><p>15%</p><p>20%</p><p>25%</p><p>30%</p><p>35%</p><p>Any serious illness or disease Head of household unemployed</p><p>Natural Disasters</p><p>1 2 3 4 5Income Quintile</p><p>6/37</p></li><li><p>PERVERSE INFORMAL AND FORMAL</p><p>Source: Living Standards Measurement Study Survey, 2003</p><p>The Poor Adopt Perverse Strategies to Cover Losses </p><p>7/37</p><p>11</p><p>1</p><p>1</p><p>1</p><p>2 2</p><p>2</p><p>2</p><p>2</p><p>33</p><p>3</p><p>3</p><p>3</p><p>4 4</p><p>4</p><p>4</p><p>45</p><p>5</p><p>5</p><p>5</p><p>5</p><p>0%</p><p>5%</p><p>10%</p><p>15%</p><p>20%</p><p>25%</p><p>30%</p><p>Food expenses were reduced</p><p>Clothing expenses were reduced</p><p>Take Their Children Out of the School</p><p>Incurred debts Savings were spent</p><p>1 2 3 4 5</p></li><li><p>Households Monthly Income per Socioeconomic Level</p><p>Source: FASECOLDA - YANHAAS 2009</p><p>20,6%</p><p>13,7%</p><p>11,8%</p><p>23,8%</p><p>18,3%</p><p>8,7%</p><p>3,2%</p><p>14,6%</p><p>6,0%</p><p>4,5%</p><p>20,2%</p><p>26,2%</p><p>22,8%</p><p>5,7%</p><p>12,3%</p><p>2,4%</p><p>2,8%</p><p>10,3%</p><p>24,9%</p><p>27,7%</p><p>19,6%</p><p>NS/NR</p><p>&gt; $1.001 USD</p><p>$701 - 1.000 USD</p><p>$501 - $750 USD</p><p>$351 - $500 USD</p><p>$251 - $350 USD</p><p>&lt; $250 USD</p><p>SEC 1 SEC 2 SEC 3</p><p>8/37</p></li><li><p>Risks Poor People Have Suffered</p><p>7,7%</p><p>9,4%</p><p>16,6%</p><p>11,7%</p><p>15,0%</p><p>20,8%</p><p>7,0%</p><p>1,0%</p><p>14,2%</p><p>10,9%</p><p>9,5%</p><p>27,1%</p><p>11,8%</p><p>14,5%</p><p>20,7%</p><p>28,0%</p><p>31,7%</p><p>45,0%</p><p>Labor Accident</p><p>Traffic Accident</p><p>Theft</p><p>Death</p><p>Illness</p><p>Unemployment</p><p>SEC 1 SEC 2 SEC 3</p><p>Source: FASECOLDA - YANHAAS 2009</p><p>9/37</p></li><li><p>How Poor People Covered Their Risks</p><p>0,4%</p><p>2,9%</p><p>3,2%</p><p>3,7%</p><p>6,5%</p><p>8,1%</p><p>20,2%</p><p>55,2%</p><p>Others</p><p>Look for another income</p><p>Lottery and charity</p><p>Insurance</p><p>Sell assets</p><p>Reduce comsuption</p><p>Savings</p><p>Loans</p><p>Source: FASECOLDA - YANHAAS 2009</p><p>10/37</p></li><li><p> Products that respond to the protection needs of low income people.</p><p> The costs are high in training agents and in educating the clients. In thatregard, policies should be easy to understand and to explain.</p><p> Periodical payments regarding their cash flow.</p><p> The scale of operation must be very small in terms of premiums but in highvolumes.</p><p> Microinsurance is not an economic version of traditional products.</p><p> Easy to sign: without previous inspections, special conditions to be apolicyholder and moral hazard.</p><p> No exclusions.</p><p>Different Product Characteristics </p><p>11/37</p></li><li><p> Easy to collect the premium thanks to the alliances with utilities services,microfinances institutions and retailers, among others.</p><p> Easy to compensate. Fast payment and without many requirements.</p><p> Claim process could not be the same for an insurance value of 100thousands dollars than for an insurance value of one thousand dollars.</p><p> Payment process with minimal verifications. Evidence could replace somerequirements which are needed in traditional insurance products.</p><p> Products are meant to be used, so the best reward in terms of clientconfidence is to pay with minimal conditions.</p><p>Different Product Characteristics </p><p>12/37</p></li><li><p>Development of Microinsurance Market in Colombia </p><p>Reasons and Results</p><p>13/37</p></li><li><p> In regards to the Planning National Department, in 2006 there were 20,3Million people in poverty in Colombia (41%) and 5,4 Million people in extremepoverty (12%)</p><p> Poor are more vulnerable to risks and they are not able to face them properly.</p><p> Low insurance penetration. According to Sigma 2008, 2,2% measure howpremiums / GNP</p><p> Larger potential market.</p><p> The development of microinsurance has been based on market solutions,where companies compete by offering alternative combinations of productsand coverage, through different distribution channels.</p><p>Reasons and Lessons </p><p>14/37</p></li><li><p> Colombia is a country case where microinsurance has been developingrapidly through the private sector initiative, without any special laws, rules orregulations.</p><p> According to the Microinsurance Center and our own statistics there arethree million policiyholders. Microinsurance encompasses more than 1,3% ofall premiums.</p><p>Lessons From The Colombian Experience</p><p>15/37</p></li><li><p> More than 40% of insurance companies in Colombia (national and foreigncapital based, mutual cooperatives and one state-owned) already offer sometype of microinsurance products.</p><p> Cooperative insurance companies have had microinsurance operations formore than 15 years.</p><p> They have had to adjust their internal process to serve low income people.</p><p> Licensed and regulated providers ensures client protection.</p><p> A microinsurance business not as a special line of business or a specialinsurance company, but as a product under the regular lines of business,allows the application of the large numbers law and permits internal crosssubsidies which ensure the viability and sustainability of this new kind ofbusiness.</p><p>Microinsurance Providers</p><p>16/37</p></li><li><p>Issued Premiums December 2009</p><p>Source: FASECOLDA 2010 Microinsurance Preliminary Results up to December 2009</p><p>Includes: AIG, ALFA, A</p></li><li><p>Total Issued Microinsurance Premium / Total Industry 2009</p><p>Source: FASECOLDA 2010 Microinsurance Preliminary Results up to December 2009</p><p>Includes: AIG, ALFA, ALICO, AURORA, COLPATRIA, COLSEGUROS, ESTADO, LIBERTY, MAPFRE, QBE, SOLIDARIA y SURA</p><p>Does not include: EQUIDAD y CARDIF</p><p>1,32%</p><p>Primas Emitidas Total Industria</p><p>Primas Microseguros</p><p>18/37</p></li><li><p>Policyholders December 2009</p><p>Dec - 2008 Dec - 2009Growth</p><p>Policyholders % Policyholders %</p><p>Funeral 780.783 31,7% 722.123 24,6% -7,5%</p><p>Life 738.558 30,0% 1.017.273 34,7% 37,7%</p><p>Accidental D. 657.757 26,7% 699.275 23,8% 6,3%</p><p>Others 288.573 11,7% 496.385 16,9% 72,0%</p><p>Total 2.465.671 100,0% 2.935.056 100,0% 19,0%</p><p>Source: FASECOLDA 2010 Microinsurance Preliminary Results up to December 2009</p><p>Include: AIG, ALFA, ALICO, AURORA, COLPATRIA, COLSEGUROS, ESTADO, LIBERTY, MAPFRE, QBE, SOLIDARIA </p><p>Does not include: EQUIDAD, CARDIF y SURA</p><p>19/37</p></li><li><p>Average Monthly Premium</p><p>(1) Note: The anual average premium in funeral services corresponds to the whole nuclear family, meaning 4 people in average per house. This means that the anual premium per person in funeral services is in average 11 dollars.</p><p>Dec-08 Dec-09</p><p>GrowthAverage Anual Premium</p><p>Average Monthly Premium</p><p>Average Anual Premium</p><p>Average Monthly Premium</p><p>Funeral $ 40,6 $ 3,4 $ 42,9 $ 3,6 5,7%</p><p>Life $ 17,8 $ 1,5 $ 20,5 $ 1,7 14,9%</p><p>Accidental D. $ 11,4 $ 0,9 $ 19,0 $ 1,6 67,1%</p><p>Others $ 10,6 $ 0,9 $ 10,2 $ 0,9 -3,0%</p><p>Total $ 22 $ 1,9 $ 23,9 $ 2,0 6,5%</p><p>Source: FASECOLDA 2010 Microinsurance Preliminary Results up to December 2009</p><p>Includes: AIG, ALFA, ALICO, AURORA, COLPATRIA, COLSEGUROS, ESTADO, LIBERTY, MAPFRE, QBE, SOLIDARIA</p><p>Does not include: EQUIDAD, CARDIF, SURA</p><p>20/37</p></li><li><p>Average Insured Value</p><p>Source: FASECOLDA 2010 Microinsurance Preliminary Results up to December 2009</p><p>Includes: AIG, ALFA, ALICO, AURORA, COLPATRIA, COLSEGUROS, ESTADO, LIBERTY, MAPFRE, QBE, SOLIDARIA</p><p>Does not include: EQUIDAD, CARDIF y SURA</p><p>Dec-08 Dec-09</p><p>GrowthAverage</p><p>Insured ValueAverage</p><p>Insured Value</p><p>Funeral $ 1.108 $ 1.124 1,4%</p><p>Life $ 2.614 $ 4.201 60,7%</p><p>Accidental D. $ 9.277 $ 14.651 57,9%</p><p>Others $ 9.925 $ 10.043 1,2%</p><p>Total $ 4.770 $ 6.922 45,1%</p><p>21/37</p></li><li><p>Paid Claims December 2009</p><p>Source: FASECOLDA 2010 Microinsurance Preliminary Results up to December 2009</p><p>Includes: AIG, ALFA, ALICO, AURORA, COLPATRIA, COLSEGUROS, ESTADO, LIBERTY, MAPFRE, QBE, SOLIDARIA y SURA</p><p>Does not include: EQUIDAD y CARDIF</p><p>Dec-08 Dec-09</p><p>GrowthPaid Claims(USD Millions) </p><p>%Paid Claims</p><p>(USD Millions) %</p><p>Funeral $ 21,5 78,9% $ 18,9 72,2% -12,5%</p><p>Life $ 4,5 16,5% $ 5,6 21,6% 25,2%</p><p>Accidental D. $ 0,8 3,1% $ 1,0 3,8% 18,3%</p><p>Others $ 0,4 1,4% $ 0,6 2,4% 58,1%</p><p>Total $ 27,3 100,0% $ 26,1 100,0% -4,3%</p><p>22/37</p></li><li><p>Number of Paid ClaimsDecember 2009</p><p>Dec - 2008 Dec - 2009</p><p>GrowthNo. Paid Claims % No. Paid Claims %</p><p>Funeral 18.513 79,7% 18.848 75,0% 1,8%</p><p>Life 1.584 6,8% 2.244 8,9% 41,7%</p><p>Accidental D. 1.992 8,6% 2.701 10,7% 35,6%</p><p>Others 1.138 4,9% 1.333 5,3% 17,1%</p><p>Total 23.227 100,0% 25.126 100,0% 8,2%</p><p>Source: FASECOLDA 2010 Microinsurance Preliminary Results up to December 2009</p><p>Includes: AIG, ALFA, ALICO, AURORA, COLPATRIA, COLSEGUROS, ESTADO, LIBERTY, MAPFRE, QBE, SOLIDARIA y SURA</p><p>Does not include: EQUIDAD y CARDIF</p><p>23/37</p></li><li><p>Average Paid Claims</p><p>Source: FASECOLDA 2010 Microinsurance Preliminary Results up to December 2009</p><p>Includes: AIG, ALFA, ALICO, AURORA, COLPATRIA, COLSEGUROS, ESTADO, LIBERTY, MAPFRE, QBE, SOLIDARIA </p><p>Does not include: EQUIDAD, CARDIF y SURA</p><p>Dec-08 Dec-09</p><p>GrowthAveragePaid Claims</p><p>AveragePaid Claims</p><p>Funeral $ 1.164 $ 1.000 -14,0%</p><p>Life $ 2.053 $ 1.892 -7,8%</p><p>Accidental D. $ 424 $ 370 -12,8%</p><p>Others $ 347 $ 468 35,0%</p><p>Total $ 1.121 $ 984 -12,2%</p><p>24/37</p></li><li><p>Paid Claims Ratio</p><p>Source: FASECOLDA 2010 Microinsurance Preliminary Results up to December 2009</p><p>Includes: AIG, ALFA, ALICO, AURORA, COLPATRIA, COLSEGUROS, ESTADO, LIBERTY, MAPFRE, QBE, SOLIDARIA </p><p>Does not include: EQUIDAD y CARDIF</p><p>dec-08 dec-09Growth</p><p>Paid Claims Ratio Paid Claims Ratio</p><p>Funeral 68,0% 60,9% -10,5%</p><p>Life 27,7% 21,9% -20,9%</p><p>Accidental D. 11,3% 7,5% -33,4%</p><p>Others 13,0% 12,3% -5,3%</p><p>Total 46,7% 34,8% -25,5%</p><p>25/37</p></li><li><p>Distribution Channels</p><p>Where is the success?</p><p>26/37</p></li><li><p> Sign alliances with proper distribution channels that know the market andensure easy access to the same.</p><p> The channel should ensure fast and massive sales, and the collection ofpremiums.</p><p> The distribution of microinsurance products is easier when done along withother financial and non financial services.</p><p> Distribution mechanisms ought to be innovative, low cost and massive.</p><p> Most used channels: Utilities Services, MFI, Cooperatives, etc.</p><p>Different Distribution Characteristics </p><p>27/37</p></li><li><p>Access to Utilities</p><p>Source: DANE ECV - 2008</p><p>95,8%</p><p>87,3%</p><p>72,9%</p><p>35,3%</p><p>54,7%</p><p>17,7%</p><p>97,2%</p><p>86,7%</p><p>73,9%</p><p>47,4%44,3%</p><p>83,8%</p><p>Electricity Aqueduct Sewer system Town gas Phone Mobile phone</p><p>2003 2008</p><p>28/37</p></li><li><p>Issued Premiums per ChannelDecember 2009</p><p>Source: FASECOLDA 2010 Microinsurance Preliminary Results up to December 2009</p><p>Does not include: EQUIDAD y CARDIF</p><p>Dec-08 Dec-09</p><p>GrowthIssued Premiums(USD Millions) </p><p>%Issued Premiums(USD Millions) </p><p>%</p><p>Banks $ 3,6 6,5% $ 6,7 9,5% 85,1%</p><p>Familiar Benefits Unions $ 0,5 0,8% $ 0,8 1,2% 74,7%</p><p>Cooperatives $ 24,3 43,9% $ 22,5 32,1% -7,3%</p><p>Utilities $ 18,9 34,0% $ 27,4 39,0% 45,1%</p><p>MFI $ 5,6 10,2% $ 9,7 13,8% 72,0%</p><p>Supermarkets $ 1,1 1,9% $ 1,2 1,7% 12,9%</p><p>Others $ 1,5 2,6% $ 1,9 2,7% 31,7%</p><p>TOTAL $ 55,4 100,0% $ 70,2 100,0% 26,8%</p><p>29/37</p></li><li><p>Policyholders per Channel December 2009</p><p>Source: FASECOLDA 2010 Microinsurance Preliminary Results up to December 2009</p><p>Does not include : EQUIDAD ,CARDIF y CARDIF</p><p>Dec-08 Dec-09Growth</p><p>Policyholders % Policyholders %</p><p>Banks 93.599 3,8% 224.445 7,6% 139,8%</p><p>Familiar Benefits Unions 5.517 0,2% 8.081 0,3% 46,5%</p><p>Cooperatives 612.981 24,9% 508.263 17,3% -17,1%</p><p>Utilities 903.572 36,6% 1.290.137 44,0% 42,8%</p><p>MFI 476.487 19,3% 726.158 24,7% 52,4%</p><p>Supermarkets 309.669 12,6% 66.702 2,3% -78,5%</p><p>Others 63.846 2,6% 111.270 3,8% 74,3%</p><p>TOTAL 2.465.671 100,0% 2.935.056 100,0% 19,0%</p><p>30/37</p></li><li><p>Microinsurance for Familias en Accin and Red Juntos</p><p>The Challenge</p><p>31/37</p></li><li><p> Familias en Accin is a Cash Conditional Transfer program in which 3 millionfamilies in poverty or extreme poverty with children below 18 years old,receive, per each child, a subsidy to keep children at school and to meetnutrition standards.</p><p> The CCT is $50 dollars, given every month through a saving account (2million families)</p><p> Familias Red Juntos is a program that identifies the extremely poor and picksup a baseline, which is composed of 45 goals in 9 areas (housing, banking,education, health, etc).</p><p> The program encourages 1,5 millions families to meet the goals, otherwisethey will continue in the extreme poverty.</p><p>Who are Familias en Accin &amp; Red Juntos</p><p>32/37</p></li><li><p> Red Juntos does not give subsidies, it just gives an accompaniment to thefamilies through a person who is called the Cogestor and whose goal is totake out the family from the poverty.</p><p> The aim of the program is to bring near the families the different public andprivate services supply, which could help them reach the goals and thus,overcome the poverty.</p><p> One of the goals is financial education and access to microinsurance.</p><p> To meet that goal, Accin Social (the policy of the government in charge ofboth programs),the insurance industry, paralife and multilaterals are workingon:</p><p>Who are Familias en Accin &amp; Red Juntos</p><p>33/37</p></li><li><p> Setting up a fund with multilaterals and government resources to insure 1,5millions families, subsidizing 100% of the premium the first year, 70% secondyear and 40% the third year.</p><p> The insured value of the life insurance should be at least $1.000 dollars andthe premium 3 or 3,5 dollars per year.</p><p> No exclusions, no conditions.</p><p> 72 hour for paying claims.</p><p> Government would like that all insurance companies to join to this initiative,and that is the reason why Fasecolda was inviting. Companies interested inparticipating will create a risk pooling.</p><p>The Project</p><p>34/37</p></li><li><p> A portion of the funds resources will focus on the financial educationprogram. (Fasecolda has developed for two years a program like that throughworkshops and is going to launch the radio program next May).</p><p> Insurance companies have to commercialize a voluntary product to cover thewife or husband.</p><p> Insurance companies have to develop an innovative idea to collect thepremium since the second year of the project and utilities look like one of thepossible distribution channels.</p><p>The Project</p><p>35/37</p></li><li><p> Colombia is a case where microinsurance has had a fast developmentthrough the private sectors initiative, without any special laws, rules orregulations.</p><p> The development of micro insurance has been based on market solutions.</p><p> The biggest challenge is selecting the appropriate distribution channel thatensures massive sales and the colletion of the premium.</p><p> Insurance and financial culture must be encouraged.</p><p> The access to insurance from the poorest of the poor could be encouragedthrough public private initiatives as the one we are working on.</p><p>Final Comments</p><p>36/37</p></li><li><p>Thanks !</p><p>37/37</p><p>MICROINSURANCE IN COLOMBIA:Lessons and ChallengesFPD WEEK 2010Washington D.C March 4 - 2010 Slide Number 2Low Income Markets Vs. Traditional Insurance MarketsDifferent Client Product and Distribution CharacteristicsSlide Number 4Slide Number 5Slide Number 6Slide Number 7Slide Number 8Slide Number 9Slide Number 10Slide Number 11Slide Number 12Development of Microinsurance Market in Colombia Reasons and ResultsSlide Number 14Slide Number 15Slide Number 16Slide Number 17Slide Number 18Slide Number 19Slide Number 20Slide Number 21Slide Number 22Slide Number 23Slide Number 24Slide Number 25Distribution ChannelsWhere is the success?Slide Number 27Slide Number 28Slide Number 29Slide Number 30Microinsurance for Familias en Accin and Red JuntosThe ChallengeSlide Number 32Slide Number 33Slide Number 34Slide Number 35Slide Number 36Thanks !</p></li></ul>

Recommended

View more >