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Microinsurance reaches nearly 500 million people worldwide

arton3820.jpgAccording to recent findings of the International Labour Organization (ILO) and the Munich Re Foundation, microinsurance – which aims to protect poor people against risks (e.g. accidents, illnesses, death in the family, natural disasters and property losses) in exchange for tailored insurance payments – is expanding at a breathtaking pace, reaching nearly 500 million people worldwide. In the past five years, the number of people covered by microinsurance has increased nearly 6.5 times. China and India are leading this development, covering about 80% of the microinsurance market.

These rather impressive findings are part of the second volume of the Microinsurance Compendium, entitled “Protecting the poor,” which is a joint effort of ILO’s Microinsurance Innovation Facility and the Munich Re Foundation. This volume, as well as the first volume published in 2006, is a practical, wide-ranging resource for policymakers, insurers, academics and NGO on the latest thinking in the microinsurance field. Where volume I covered the many aspects of microinsurance in detail, such as product design, marketing, premium collection, institutional arrangements and governance, volume II continues with information on recent and innovative micoinsurance practices and emerging ideas and trends. It examines new products and delivery channels, consumer education tools, changes in regulations, providers and schemes, as well as the contribution of microinsurance to social protection and resilience building, health, life and agriculture. Volume II of the Compendium, for example, finds that not only more poor people have access to microinsurance, but this access goes hand in hand with an expanding variety of risk management products and of insurance providers (e.g., banks, retailers or cell phone companies).

Overall, the authors seem to agree that microinsurance by itself is unlikely to break the poverty cycle. However, “when coupled with social protection, risk prevention and mitigation, and supplemented by other risk-managing financial services such as savings and emergency loans, microinsurance can play a critical role at multiple levels to efficiently manage risks, reduce vulnerability and contribute to poverty alleviation.”

Click here to access the Compendium: Protecting the Poor (Volume I & II).

To read the press release, click here.

To see an interview with Craig Churchill, Team Leader of the ILO’s Microinsurance Innovation Facility and Chair of the Microinsurance Network, click here.

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