the landscape of microinsurance in asia and oceania landscape of microinsurance in asia and ... top...

The Landscape of Microinsurance in Asia and Oceania Arman Oza

In Association with:

Premasis Mukherjee

Rupalee Ruchismita

13 November 2013

Munich Re Foundation

How do we define microinsurance?

13/11/2013 2

Individual

Instt./Govt. co-

contribution

Partially Subsidised

Fully Govt. Subsidised

Individual

Semi-formal Instt.

Insurer

Govt.

CBO

Community

Risk Underwriting

by

Premium Contribution

Informal Insurance

Social Security

How we define microinsurance : the new paradigm

Microinsurance Social Micro

insurance

How practitioners define microinsurance: in terms of target

clients

Landscape of Microinsurance in Asia and Oceania

Microinsurance in Asia and Oceania


Outreach

• 172.8mn individuals/properties covered by

MI in Asia and Oceania

• The 10 biggest MI countries contribute

over 99% of the total MI coverage

• Higher coverage in South Asia: > 120 mn

13/11/2013 4

0

20

40

60

80

100

120

0,3 1,1 1,3 2,5 5,3 9,3 9,4 11,9 19,9

111,1

Fig. 1: 10 biggest MI countries (in coverage) [in Million]

Box1: Key numbers

31 countries participated 24 countries with microinsurance 216 providers with ∼ 500 products

83.86 MM Life 27.96 MM Health

77.83 MM Accident 7.67 MM Property

26.2 MM Agriculture 4.65 MM Takaful

Central 3,1%

East 8,3%

Oceania 0,01%

Western 0,1%

South East

18.6% South 70,0%

Figure 2: Regional outreach



Number of covered people/properties by microinsurance

13/11/2013 5 Landscape of Microinsurance in Asia and Oceania

India 111.11

Philippines 19.95

China 11.85

Bangladesh 9.37

Pakistan 5.34

Mongolia 2.46

Indonesia 1.34

Malaysia 1.09

Nepal 0.34

Cambodia 0.29

Vietnam 0.16

Sri Lanka 0.07

East Timor 0.018

Uzbekistan 0.013

Lebanon 0.005

Palestine 0.003

Azerbaijan 0.001

Bhutan 0.0007

Kuwait 0.0002

Oman 0.0002

Thailand 9.31

Fiji 0.003

Jordan 0.091

Kazakhstan 0.00

Tajikistan 0.00

Afghanistan 0.00

Armenia 0.00

Yemen 0.00

Myanmar 0.00 Laos

0.00

Papua and New Guinea

0.00


Coverage

• The Philippines register highest coverage

ratio (21.3%)

• Despite impressive outreach, MI coverage

ratio in the continent is limited (4.36%)

• Including social microinsurance, coverage

ratio is 48%

13/11/2013 6

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

1,5% 1,6% 2,1% 3,1% 3,5% 3,8% 6,2%

9,2%

14,0%

21,3%

Fig.3: Top 10 countries on microinsurance coverage ratio

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Fig. 4: Breakdown of total lives/properties covered by main risk type in regions

Life Health Agriculture Property Accident Takaful



Products and Premium

13/11/2013 7

-

5

10

15

20

25

30

Num

ber o

f liv

es/p

rope

rties

co

vere

d (in

Milli

on)

Fig. 6: Number lives/properties covered by region

Central East Oceania Western Southeast South

53.6 59.8

19,6 15,3 9,2 10,9

25,2 28,9

0

25

50

75

Life Health Agriculture Property Accident Takaful

USD

Fig. 7: Dispersion of the average annual premium

211 190 203.5 203.5



Growth of microinsurance

• Period of study: 2010 -2012

• Compounded annual growth rates:

31% growth in coverage

47% growth in premium generated

13/11/2013 8

-50%

0%

50%

100%

150%

200%

Viet

nam

K

uwai

t B

angl

ades

h O

man

C

ambo

dia

Pal

istin

e S

ri La

nka

Phi

lippi

nes

Pak

ista

n Le

bano

n In

dia

Mon

golia

N

epal

C

hina

Fi

ji In

done

sia

Mal

aysi

a

Fig. 9: Compound annual growth rate in coverage

Others 1%

India 70%

China 15%

Philippines 8%

Mongolia 3%

Indonesia 2%

Bangladesh 1%

Fig. 8: Contribution to the overall growth

• Coverage growth leaders:

Malaysia (185%) and Indonesia (103%)

• India contributed up to 70% of the overall

MI growth

• In terms of products, Accident insurance

is the main contributor to the overall

growth of the industry.



Compound annual growth rate in coverage


India 31%

Philippines 18%

China 76%

Bangladesh 7%

Pakistan 19%

Mongolia 54%

Indonesia 103%

Malaysia 185%

Nepal 60%

Cambodia 16%

Vietnam -25% Sri Lanka

17%

Lebanon 23%

Palestine 17%

Kuwait -7%

Oman 9%


Microinsurance providers and delivery channels of microinsurance

• Regulated commercial insurer

lead the sector.

• Most commonly used channels

are member organisations, MFIs

& insurance agents


0%

20%

40%

60%

80%

100%

Fig. 10: Distribution channels by risk types

CBOs, mutuals other mem org Funeral parlours Churches Retailers MI brokers Employer Mobile MFIs, remittances, banks Spec/MI agents Conventional insurance agents

7,7%

10,1%

8,6% 66,9%

Fig. 11: Percentage of coverage by provider type

Community-based Organisation Cooperative

Government Agency

Hospital

Mutual

NGO

Other

Parastatal Insurer

Regulated Commercial Insurer Takaful

Microinsurance in Asia and Oceania : The un-ignorable social microinsurance


Coverage and products


0%

25%

50%

75%

100%

37,4%

9,2%

35,5%

83,0%

62,5%

Fig. 15: Microinsurance coverage ratio of 10 top countries

Microinsurance Including Social Microinsurance

0

200

400

0,1 1,0 2,2 10,5 15,0 38,5 45,8 76,4

316,6

1.154,5

Fig. 14: Top 10 countries with social microinsurance (in millions)

Life 1,2%

Health 90,9%

Agriculture 7,8%

Fig. 12: Type of social microinsurance schemes

Life Health Accident Property Agriculture Takaful

83,9

28,0

77,8

7,7

26,2

4,7

20,3

1.510,1

130,1

Fig.13: Number of individuals/properties covered by risk type

[in Million]

Microinsurance Social Microinsurance

Microinsurance landscape > Global microinsurance index


Microinsurance sector is influenced by business environment it operates in

13/11/2013 14

Microinsurance market as a derivative sector depends on Microinsurance Infrastructure

Overall Business Infrastructure and Environment

Reg

ulat

ory

En

viro

nmen

t

Insurance Industry

Microfinance Industry

Microinsurance Sector

- Development - Prospect - Possibilities

Demography and Economy

Political Environm

ent



Framework for global microinsurance development index


Business environment - Ease of doing business Study; 2012 - Global Innovation Index’2012

- Overall innovation index - Government effectiveness - Rule of law and regulation - Ease of starting business - R&D as % of GDP - Intensity of local competition - FDI as % of GDP

Industry development - Insurance industry

- Insurance Penetration - Insurance Density - Insurance Premium - Growth - Number of Insurers

- Financial inclusion - % of adults having bank accounts - Microfinance loan as % of GDP - Score from global microscope - Growth in microfinance

Microinsurance potential - Rural population - 50% of unorganised workforce

Microinsurance regulatory feasibility - Regulatory capacity - Regulatory clarity - Promotion by regulator/govt.

Microinsurance supply - Individuals covered - Premium collected

3 4 5

2 1


Countries’ performance differs based on parameter

13/11/2013 16

Pakistan Indonesia

Philippines Azerbaijan

Vietnam India

Thailand Mongolia

China Malaysia

Overall Business Environment Development of insurance and financial inclusion sector

Microinsurance market size

Vietnam Azerbaijan

Thailand Laos India

China Pakistan

Nepal Cambodia Philippines

Microinsurance regulatory feasibility



Indicative ranking of key Asian countries in microinsurance development index


Nepal

Vietnam

Malaysia

Mongolia

Pakistan

Cambodia

Thailand

Philippines

China

India

Business Environment

Industry Development

MI Market Size

MI Regulatory Feasibility

Microinsurance Supply

Landscape > microinsurance index > intervention strategy


Intervention strategies will depend on independent variables


Azerbaijan

Bangladesh

Cambodia China

India

Indonesia

Jordan

Kazakhstan

Laos

Lebanon

Malaysia Mongolia

Nepal

Pakistan

Philippines

Thailand

Turkey

Vietnam

Fina

ncia

l Inc

lusi

on L

evel

Insurance Market Development

Bubble size= Potential Microinsurance Market Size

A

D

B

C

Cat. A: Insurance Leaders

Cat. B: Financially Inclusion Leaders

Cat. C: Regulation Dependent Cat. D: Transitory

Characteristic: In Microinsurance lead

can be taken by insurance industry while using financial inclusion

sector as vibrant distribution

Characteristic: Microinsurance can develop through the semi-formal financial inclusion players, viz.,

MFIs, NGOs, Cooperatives

Characteristic: Microinsurance can

develop only through regulatory and policy

intervention

Characteristic: Market oriented

microinsurance in development.

Regulator/ Govt. need to nurture the sector

13 November 2013

Thank you

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