Better microinsurance for MFIs

Véronique Faber; Michal Matul; Craig Churchill; Aparna Dalal; Josh Ling

doi:10.3362/1755-1986.2014.006

Better microinsurance for MFIs

Véronique Faber | Michal Matul | Craig Churchill | Aparna Dalal | Josh Ling

Microfinance institutions (MFIs) that offer savings services and/or credit to low-income households and small businesses remain one of the most popular and effective channels for delivering microinsurance. MFIs are evolving beyond basic credit life insurance. However, making the transition to more complex products and business models presents several challenges. This paper outlines 10 key recommendations for MFIs to improve their microinsurance offerings. MFIs need to: 1) understand market needs and preferences; 2) prioritize savings; 3) make mandatory cover valuable; 4) proactively develop the product menu; 5) improve claims processing; 6) apply holistic risk management; 7) create a demonstration effect; 8) build structures for success; 9) build insurance capacity; and 10) monitor their performance. Insurance has the potential to improve the health and welfare of low-income households, and consequently enhance the social and financial performance of the MFI.

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