iii: Background on: microinsurance and emerging markets

Executive summary :

A growing number of insurers are tapping into markets in developing countries through microinsurance projects, which provide low-cost insurance to individuals generally not covered by traditional insurance or government programs.

Microinsurance products tend to be much less costly than traditional products and thus extend protection to a much wider market.

Microinsurance offers insurers opportunities in a new market  

Broad range of products

Products vary in type and structure but are generally distinguished by high volumes, low cost and efficient administration. Policies may be offered along with a small loan, with premiums that are a small percentage of the loan amount.

The Microinsurance Network is a nonprofit global organisation of microinsurance industry experts comprised of 80 institutional members from more than 40 countries committed to promoting the development and delivery of valuable insurance services for low-income people.

Major opportunity

According to the Network’s annual report, while emerging markets account for around one-fifth of total global premium, they represent 80 percent of the world population, pointing toward an enormous potential for growth. The Network’s World Map of Microinsurance shows that almost 290 million people worldwide are covered by at least one microinsurance policy.

Innovative technology applications play an important role in microinsurance. Mobile network operators are providing coverage to 40 million people in Asia, where nine times out of ten, mobile microinsurance is a person’s first experience with insurance.

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