2007 General Meeting Assemblée générale 2007 Montréal, Québec Denis Garand [email protected]@garandnet.net MICROINSURANCE IP-31 2007 General Meeting.

2007 General MeetingAssemblée générale 2007

Montréal, QuébecDenis Garand [email protected]

MICROINSURANCE IP-31

2007 General MeetingAssemblée générale 2007

Montréal, QuébecDenis Garand [email protected]

MICROINSURANCE IP-31

Canadian Institute

of Actuaries

Canadian Institute

of Actuaries

L’Institut canadien desactuaires

L’Institut canadien desactuaires

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

Millennium development goalsMillennium development goals

• ERADICATE EXTREME POVERTY AND HUNGER

• UNIVERSAL PRIMARY EDUCATION• PROMOTE GENDER EQUALITY AND

EMPOWER WOMEN• REDUCE CHILD MORTALITY• COMBAT HIV/AIDS, MALARIA AND

OTHER DISEASES• ENSURE ENVIRONMENTAL

SUSTAINABILITY• DEVELOP A GLOBAL PARTNERSHIP FOR

DEVELOPMENT

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

Importance of Microinsurance

In its first report, Insuring for Sustainability, the Insurance Working Group of the UNEP FI ranked nine global sustainability issues identified as vital for insurers to address. Topping the list is climate change, followed by microinsurance, lifelong income, health, emerging man-made risks, environmental liability, natural resources, recycling and internal resource efficiency.

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

Microinsurance market

• 3.0 billion earn less than $2 (US) a day• 1.3 billion earn less than $1 (US) a day

• 72% of the world population has income below $3000 a year

Source: World Bank

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007Micro Finance

• Founded by Muhammad Yunus (Grameen Bank in Bangladesh)– Lending without collateral

– Doorstep service

– Small payments

– Impact on 110 million poor

• Spandana

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

What is Microinsurance?What is Microinsurance?

• Living without insurance!

• Part of solution to lower poverty.

• Can Microinsurance be viable?

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

Who’s involved

• ILO

• CGAP

• World Bank

• Other agencies

• Insurance companies world wide

• 5 out of 10 actuaries Canadian!

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

Poverty and Microinsurance

• 100,000,000 become poor, each year, due to a lack of protection. (WHO 2005)

• Does the world have the correct priorities?– Health care cost Rwanda $200 million– War in Iraq $150 billion

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

Reasons for Decent into poverty

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

Why do people save or borrow - UGANDA

S.No. ITEMS SAVE BORROW

1For meeting household basic needs such as food, clothing, health services 82% 61%

2 For emergency (burial, medical) 70% 32%3 For education of self, children or siblings or others 35% 19%

4 For expanding your business 19% 15%

5 To be able to leave something for my children 12% -

6 For starting up a new business 11% 7%

7 For using later in life/old age 10% -

8 For purchase of livestock /cattle 9% 4%

9 For social reasons (wedding, travel, bride price) 8% 3%

10 For purchasing or building a house to rent out 6% -

11 To pay off debts - 9%

12 For improving a house - 6%

13 For agricultural implements - hoe, plow, tractor - 3%

Source: “Preliminary” findings from FinScope Survey (2007)

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

The cycle of poverty

• Most poor are very resourceful

• Major disaster, sell all assets

• Poverty is a cash flow management problem

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

Microinsurance in the world

• Credit life (40 million and viable)• Accident insurance• Life insurance• Health (25 million and few are viable)• Assorted general insurance and crop

protection– Household goods (hut)– Weather insurance

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

Why micro health insurance?

• Principal reason for loan default for a MFI – health

• To maintain economic situation – does not reduce poverty

• Improve access• To enhance overall productivity

• Problem in USA, India, Cambodia, etc.

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

What are the challenges?

• High mortality, morbidity, assets at risk

• Low administrative margins

• Ability to pay small amounts

• Transform your insurance organization

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

Successful micro insurance (or lesson we need to relearn)

• Local organization (distribution)– Brand name – Clear communication, one page

contract (pictorial)– Target high participation– Efficient premium collection– Link with other services

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

Successful micro insurance (2)

• Clearly defined products• Rapid service• Community verification of claims

– Health• Appropriate treatment protocols• Health promotion and prevention

• Data base to help manage• Underwriting the community and

insurance

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007Other forms

• Microtakaful

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

Key to micro insurance success

• Distribution system

• Affordable quality care

• Efficient management

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

What you can learn

• Creating efficient organizations

• Creative solutions

• Understand real service issues

• Development opportunity for your staff

• TRANSFORM YOUR UNDERSTANDING OF INSURANCE AND MANAGEMENT

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007Learn more

• www.microinsurancefocus.org

• www.ilo.org/gimi

• www.munichre-foundation.org

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007

2007

Gen

eral

Mee

ting

Ass

embl

ée g

énér

ale

2007