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.

Churchill, C. and Roth, J. (2006) ‘Microinsurance: opportunities and pitfalls for micro-finance institutions’, in C. Churchill (ed.), Protecting the Poor: A Microinsurance Compendium, pp. 452-68, Munich: ILO and Munich Re Foundation.

Dowla, A. and Barua, D. (2006) The Poor Always Pay Back: The Grameen II Story, Bloomfield, CT: Kumarian Press.

Gross, P. (2012) ‘Succeeding with mass-market microinsurance: the experience of MicroEnsure’, presentation at International Microinsurance Conference - Learning Session, Accra, Ghana, 22-23 May 2012.

Guarnaschelli, S., Cassar, G. and Dalal, A. (2012) Selling More, Selling Better: A Microinsurance Sales Force Development Study, Microinsurance Paper No. 16, Geneva: ILO.

Manje, L. (2005) Madison Insurance: Zambia, Good and Bad Practices Case Study No. 10, CGAP Working Group on Microinsurance, Geneva: ILO.

Matul, M., Tatin-Jaleran, C. and Kelly, E. (2012) ‘Improving client value: insights from India, Kenya, and the Philippines’, in C. Churchill and M. Matul (eds), Protecting the Poor: A Microinsurance Compendium Volume II, pp. 300-30, Munich: ILO and Munich Re Foundation.

McCord, M. and Buczkowski, G. (2004) CARD MBA: The Philippines, Good and Bad Practices Case Study No. 4, CGAP Working Group on Microinsurance, Geneva: ILO.

Smith, A., Smit, H. and Chamberlain, D. (2011) Beyond Sales: New Frontiers in Microinsurance Distribution, Microinsurance Paper No. 8, Geneva: ILO.

Wipf, J. and Garand, D. (2010) Performance Indicators for Microinsurance: A Handbook for Microinsurance Practitioners, 2nd edn, Luxembourg: Appui au développement autonome.