The topic of microinsurance is becoming very popular, even though there is as yet little actual documentation of implemented programmes outside credit unions. This article reports on a study, financed by MicroSaveAfrica, of four health insurance programmes representing the four general models of insurance provision. Two of the programmes are still in the testing phase, while the other two have more than three years' experience with their products. The programmes attached to MFIs all chose to create an institutional barrier between the insurance programme and the microfinance activities, citing issues of capacity and risk. Only one programme had significant reserves, but two of the others were taking steps to improve cost coverage. The article describes design features to avoid adverse selection, fraud and moral hazard. What the programmes charged for insurance, and what coverage was provided varied considerably between programmes. Topics such as the relationship between the specific product and the client's willingness to pay for it are critical to the issue of surplus generation with these programmes, and require further research. A very high dropout rate was seen in three of the programmes related to a universal lack of client understanding of the benefits of risk pooling. The ease with which clients could save their premiums was also an important consideration. In early testing of one programme, no evidence was found that access to quality health care has any impact on client performance with a related MFI. Finally, health insurance is a very complex business activity and great care should be taken by any MFI considering starting a programme.
Microinsurance is a rapidly growing industry that faces a variety of challenges in providing valuable products in a profitable way. Data allows stakeholders to analyse performance and make better decisions, yet data on microinsurance has been limited. Efforts to promote key performance indicators (KPIs) for individual institutions and to generate region-wide data through landscape studies have been effective but still exist on a limited scale. Expanding these efforts can professionalize the microinsurance ‘industry’ by allowing the development of useful tools to enhance products and identify opportunities. Several constraints to data collection hinder these efforts. These include definitional variability, competitive forces as a disincentive to sharing, and lack of data segregation, among others. Improving data collection will require presenting a strong value case to insurers, getting supervisors to promote KPI calculations and broader landscaping, and then using this data in a way that enhances and expands microinsurance.