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Social Protection

Building social protection floors and comprehensive social security systems

Microinsurance

Updated by Valérie Schmitt on 10.06.2015

A micro-insurance scheme is a contributory scheme that uses (among others) the mechanism of insurance. It is designed to meet the priority social protection needs of people excluded from formal social security schemes, in particular informal economy workers and their families. Membership is not compulsory and members pay, at least partially, the necessary contributions in order to cover the benefits.

Microinsurance schemes can be run by mutual benefit organizations, NGOs, micro-finance institutions, or commercial insurers. In some cases all the functions are managed by one organization; in other cases, they are shared by two or more organizations, for example in partner-agent agreements. These units usually operate at the local level and may be based on area of residence, on occupation, on ethnic affiliation or on gender. Typically these groups are already organized, for example to provide micro-credit facilities: microinsurance is often therefore an extension of their activities.  They may also obtain subsidies from the public authorities, from international aid agencies (in particular seed capital), and in certain cases from state-owned insurance companies. Participation by members (for example defining priority needs, setting the insurance premiums, managing and controlling the scheme, etc.) may defer according to the scheme’s structure.

Microinsurance may cover various risks; the most frequent microinsurance products are: life microinsurance (and retirement savings plans), health microinsurance (hospitalisation, primary health care, maternity, etc.), disability microinsurance, property microinsurance (assets, livestock, housing) and crop microinsurance (uncontrollable adverse events).

Many microinsurance schemes have been launched only in recent decades, and are thus still in the experimental stage. The countries in which they operate include Bangladesh, Benin, Burkina Faso, Côte d'Ivoire, Ghana, Guinea, Mali, Morocco, Nigeria, Philippines, Senegal, the United Republic of Tanzania, Togo, Tunisia and several countries in Latin America. An interesting example is the scheme developed by the Self-Employed Women’s Association (SEWA) in India, which ensures over 32,000 women working in informal economies.

Some advantages of microinsurance schemes relate to the capacity of microinsurance organizations to mobilize additional resources and create a viable demand for services, and to achieve a better targeting of public subsidies to low-income groups. However, microinsurance schemes are not designed to become the main pillar of a country’s social security system and many challenges still have to be faced. Some are external constraints and delivery barriers, some are deficiencies of existing products, some are associated to people's perception of insurance in general, and finally others are linked to insurance regulations or their absence. It is of the utmost importance to establish the conditions under which microinsurance organizations can organize themselves better and how their activities can be replicated on a wider scale.♦

GIMI'S READING KIT

GIMI'S READING KIT in brief

In this section you will find recommended readings organized by theme, including articles, reports, links, guides, studies, etc. The resources were gathered during the project Global Information on Microinsurance (GIMI), to support practitioners in the design, implementation and management of micro-insurance schemes.

HOW COULD SOCIAL MARKETING BE APPLIED TO MICROINSURANCE?

Resources in English:

FEASIBILITY OF MICROINSURANCE SCHEMES

Resources in English:

Resources in French:

MANAGEMENT OF MICROINSURANCE SCHEMES

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MONITORING AND EVALUATION OF MICROINSURANCE SCHEMES

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Main Resources

The social protection perspective on microinsurance

ILO, Munich Re Foundation, CGAP Working Group on Microinsurance, 2007

 

The Landscape of Microinsurance in the World's 100 Poorest Countries
J. Roth, M.J. McCord, D. Lieber, 2007 

Training

Seminars on health micro-insurance