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Pathways Towards Greater Impact Read About Designing Better MICROINSURANCE PAPER No. 18 November 2012 PATHWAYS TOWARDS GREATER IMPACT: BETTER MICROINSURANCE MODELS, PRODUCTS AND PROCESSES FOR MFIS Craig Churchill, Aparna Dalal, Josh Ling MICROINSURANCE through MFIs Copyright © International Labour Organization 2012 First published 2012 18 Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition o. that the source is indicated. For rights of reproduction or translation, application should be made to ILO Publications (Rights and Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland, or by email: [email protected]. The International Labour Office welcomes such applications. Libraries, institutions and other users registered with reproduction rights organizations may make copies in accordance with the licences issued to them for this purpose. Visit www.ifrro.org to find the reproduction rights organization in your country. PAPER N PAPER ILO Cataloguing in Publication Data Craig Churchill, Aparna Dalal, Josh Ling Pathways towards greater impact: Better microinsurance models, products and processes for MFIs/ Craig Churchill, Aparna Dalal, Josh Ling; International Labour Office. - Geneva: ILO, 2012 47 p. (Microinsurance Paper; no. 18) ISSN: 2303-9191 (web pdf) International Labour Office microinsurance / microfinance / distribution 12.02.1 ILO Cataloguing in Publication Data MICROINSURANCE The designations employed in ILO publications, whichJune are in 2011 conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the International Labour Office, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval. ILO publications and electronic products can be obtained through major booksellers or ILO local offices in many countries, or direct from ILO Publications, International Labour Office, CH-1211 Geneva 22, Switzerland. Catalogues or lists of new publications are available free of charge from the above address, or by email: [email protected] Visit our website: www.ilo.org/publns i MFIs & MICROINSURANCE CLIENT VALUE CONTENTS 18 1 > INTRODUCTION ........................................................................................................................................................................................................................................................................................... 1 o. 2 > THE EVOLUTION OF MICROINSURANCE PRODUCTS ................................................................................................................................................... 4 2.1 Improving credit-linked cover ............................................................................................................................................................................................................................................. 5 2.2 Opportunities with savings-linked insurance ............................................................................................................................................................................................ 9 2.3 Transitioning from mandatory to voluntary insurance ........................................................................................................................................................ 12 2.4 Packaging insurance within a risk management framework .................................................................................................................................. 16 2.5 Considering meso-level schemes for disaster protection ............................................................................................................................................. 20 PAPER N PAPER 3 > THE RANGE OF INSTITUTIONAL OPTIONS ....................................................................................................................................................................................... 22 3.1 Self-insuring ..................................................................................................................................................................................................................................................................................................... 22 3.2 Partnering with an insurer ..................................................................................................................................................................................................................................................... 24 3.3 Working with an intermediary ...................................................................................................................................................................................................................................... 25 3.4 Creating an insurance company .............................................................................................................................................................................................................................. 26 4 > IMPROVING BUSINESS PROCESSES .............................................................................................................................................................................................................. 29 4.1 Product design and pilot testing ................................................................................................................................................................................................................................ 30 4.2 Client education and sales ................................................................................................................................................................................................................................................. 30 4.3 Sales force structure and incentives .................................................................................................................................................................................................................. 33 4.4 Claims processing................................................................................................................................................................................................................................................................................ 35 4.5 Performance monitoring ........................................................................................................................................................................................................................................................... 37 References ......................................................................................................................................................................................................................................................................................................................................... 41 Annex .......................................................................................................................................................................................................................................................................................................................................................... 44 MICROINSURANCE ii MFIs & MICROINSURANCE CLIENT VALUE ACKNOWLEDGEMENTS 18 This paper has benefited from the contributions, insights and thoughts of scores of experts, including o. numerous MFI managers who generously provided their time for focus group discussions, interviews and reviewing drafts. Many thanks to the following individuals and organizations for their inputs: L.B. Abeysinghe (SANASA), Juan Alberto Almonacid (ACCION), Satheesh Arjili (BASIX), Ruth Aseron and John Owens (Rural Bankers Association of the Philippines), Diego Fernandez Concha (Prisma), Sawsan Eskander (SAJIDA), Isabel Cruz and Alicia Govea (AMUCSS), Swati Grewal (KGFS), Anne Hastings and Tyler Tappendorf (Fonkoze), Vatsal Joshi (BASIX), Fernando Lema Zavalia (Prodem FFP), Ghay Mapano (Rural Bankers PAPER N PAPER Association of the Philippines), Joseph Museva and Trevor Thom (Select Africa), Venu Pratapani (BASIX), Hasan Jamil Hasan (Tamweelcom), Fadi Al-Tawabini (MFW), Hendrik Riwu Kore (VisionFund), Savane Issiaka (UNACOOPEC), Dipesh Shah (Family Bank), Asha Ramaswamy (SBI Life), M.I. Dholakia (SBI), and Andres Freire (Red Financiera Rural). The authors also appreciate the detailed comments on drafts provided by a number of reviewers, including: Fatima Abu Okab (MFW), Aris Alip (CARD), Martin Hintz (Allianz), Peter Gross (MicroEnsure), Patricia Richter, Miguel Solana and Michal Matul (ILO), Michael McCord (MicroInsurance Centre), Bert Opdebeeck (BRS), Arman Oza (VimoSEWA), and
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