Microinsurance: Not Insurance As You Know It!

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The UK Microfinance Club meets monthly to discuss the latest developments in microfinance around the world. Wednesday 17 October saw discussion around Microinsurance - uncovering the important value, importance and pitfalls. Global expert in Microinsurance, Mosleh Ahmed provided expert input to the material that was presented by Microfinance without Borders to the UK Microfinance Club.

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<ul><li> 1. MicroInsuranceNot insurance as you know it! Gabriel Flores Dr. Phyllis SantaMaria </li> <li> 2. Warm up! Walk around and introduceyourself to three other people Name What you do Why are you here tonight? 2 </li> <li> 3. After tonights session, you will be able to... Distinguish the benefits of microinsurance and how it differs from conventional insurance Describe how microinsurance helps people maintain and possibly improve their position on the economic pyramid Select a way to get involved with microinsurance 3 </li> <li> 4. What is insurance? Lloyds of London 4 </li> <li> 5. What is insurance? House Unemployment: Life Govt Car &amp; Consumer Disaster: Govt Goods Security: Govt &amp; Health: NHS &amp; Private Private Injury: Corporate Pensions: Govt &amp; Professional: Private Individuals 5 </li> <li> 6. What are your opinions about insurance? [insert photo of Lloyds building] Inside Lloyds of London (BBC photo) 6 </li> <li> 7. Some opinions about insurance 7 </li> <li> 8. Blind people describing an elephant 8 </li> <li> 9. Catheryns story: UK vs US 9 </li> <li> 10. Different views of microinsurance Financial analysts Donors Insu Poor rers peo Academics ple Micronance ins5tu5ons 10 </li> <li> 11. Budi, a Borrower A loan, NO insurance,1998 NO savings 43, two sons, husband died NO assets, home, job, money, help from in- laws Moved to Dhaka, Bangladesh, seeking job and shelter 11 </li> <li> 12. Jorina Bibi, a Borrower with Insurance A loan, NO savings Insurance with Delta Life on her husbands life 1998 29, widowed, 3 young children Her in-laws demanded the life insurance money She refused, got thrown out with her three children 12 </li> <li> 13. 2008: Budi and her children She and her two sons begged, scavenged food and slept on 1998 pavements in Dhaka US$ 0.50 a day We lost contact Budi disappeared probably victim of a human trafficking gang Elder son, then 16, in jail for robbery Younger son, then 13, breaking bricks at a Photo by courtesy of Mike Bedner, Alberta, Canada; Rotary construction site GSE Member on visit to Bangladesh 13 </li> <li> 14. 2008: Jorina Bibi, a Delta Life Policyholder With help of friends and an NGO she 2008 moved into a home for destitute women With part of 80 from her husbands life insurance rented some land built a hut to live in set up a poultry business A Delta Life Microinsurance beneficiary and her poultry farm Photo by Gono-Grameen Bima Manager, Delta Life 14 </li> <li> 15. 2008: Jorina Bibis and herchildrens success Today a micro entrepreneur employs 4 people earns Taka 8,000 (64) per month Her children are successful Daughter got a teaching degree and teaches at a local school Both her sons finished college and joined her business Jorina Bibis daughter Nasreen (1st from left), a teacher, with some of her colleagues Photo by Gono-Grameen Bima Manager, Delta Life 15 </li> <li> 16. How does microinsurance help cushion the impact of shocks? WealthyEconomic Levels Non-poor Vulnerable non-poor Moderate poor Extreme poor Destitute Loan Cycles and Impact of Losses 16 </li> <li> 17. The 4 main microinsurance products Life Insurance: oFen given by MFIs Health Insurance: needs health care providers Livelihood Insurance: machinery Crop and livestock Insurance: needs sophisMcated data such as 50 yrs rainfall </li> <li> 18. How does microinsurance differ? Fast Needs based Groups Response On your EducaMon CollaboraMon doorstep MARKET SIZE: 4 BILLION PEOPLE GLOBALLY (2-3 BILLION POLICIES) </li> <li> 19. Delivery channels Insurance companies Bank, Post oce Employers Hire Charge service providers Retailers Mutuals Suppliers Low Cooperatives Income People Labour unions On-line &amp; ATM Cell phones MFIs Smart cards NGOs 19 </li> <li> 20. Life insurance with flexibility Amparar Policy by LA EQUIDAD, Colombia for their cooperative members only Monthly premium US$ 1.00; basic coverage US$ 1,250.00 50% pay out for treatment in case policy- holder contracts incurable disease while insured After policyholders death for two years Childs education expenses Medical expenses for dependents Monthly food vouchers Utility bills Beneficiaries of a La Equidad AMPARAR policy by courtesy of La Equidad 20 </li> <li> 21. Indexed rainfall insurance BASIX- India Collaboration: World Bank, IFC, and ICICI Lombard Bank, July 2003: benefits indexed to rainfall 3rd Year 2005 23,080 policyholders 5th year 2007 37,685 policies sold 8th year 2010 97,700 policyholders NOW IN 7 STATES in INDIA, PRODUCTS INCREASED Farmer in India waiting for rain by courtesy of BASIX 21 </li> <li> 22. Comprehensive healthcare with ID cardMicrocare - Uganda Provides in-patient and out- patient treatment and prescription medicine Several thousand policy holders Started as a NGO; now a licensed Uganda insurance company A Microcare desk at a participating hospital has a third party administrator to reduce moral hazard by beneficiaries or the clinicPhoto courtesy of MIRT 22 </li> <li> 23. Integrated insurance packageVimo SEWA co-op, India Three packages: death, sickness, loss of assets Annual premiums or fixed deposits Special benefits for fixed deposit members Maternity $6.90 Dentures $13.80 Hearing aid $23.00Marketing of SEWA through outdoor folktheatre. Photo courtesy of MIRT 23 </li> <li> 24. Key challengesClients Insurance products and Negative attitude industry Dont see the value Little knowledge of the Low and irregular income market Low premiums High transaction costsDelivery channels Clients high expectations Poor infrastructure Low insurance competence Lack of data for pricing Low retention rate Slow claims handling Few health care providers to link with health products 24 </li> <li> 25. Cautions about microinsurance! NOT a magic bullet NOT the right risk mgmt solution for all poor people Microfinance institutions Dont have all skills required Must assess expenses and risks before offering Microinsurance MUST NEVER act as insurers unless they have huge resources 25 </li> <li> 26. What new things have you encounteredtonight? What are the benefits of microinsurance? How does it differ from conventional insurance? How does microinsurance help people maintain and possibly improve their position on the economic pyramid? 26 </li> <li> 27. ARE YOU READY TO TAKE ACTION? 27 </li> <li> 28. How to get involved Tweet your insights to @MicrofinanceWoB (Well Tweet back!) Sign up to our mailing list on your Smartphone www.microfinancewithoutborders.com and get copies of tonights presentation Book for our free event: Practical Microfinance in Action! Tue 13 Nov, 6.30-9 pm at Allen &amp; Overy Enquire about MWBs Practical Microinsurance Consultancy Courses Consultancy support for Insurers, Regulators and Microfinance Institutions 28 </li> <li> 29. Contact Information Mosleh Ahmed info@microfinancewithoutborders.com Dr Phyllis SantaMaria Mobile: +44 7715 004 303 Landline: +44 207 839 0844 Email: phyllis@microfinancewithoutborders.com Gabriel Flores Mobile: +44 7834 528 966 Email: gabriel@microfinancewithoutborders.com 29 </li> </ul>

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