Insurance in developing countries (846.61 KB, pdf)
Microinsurance: meeting a huge potential need
The potential market for insurance in developing countries is estimated to be between 1.5 and 3bn policies. There is a significant demand for a range of insurance products including health and life insurance, agricultural and property insurance, and catastrophe cover. Microinsurance is effective in markets with little experience of insurance – but it needs to be efficient, cheap and simple.
Developing countries and microinsurance
People with the least ability to adapt are being most affected by climate change, population growth and rapid urbanisation. Recognising the need to protect these communities, governments are increasingly contributing to insurance schemes in developing countries.
The microinsurance challenges
Although microinsurance is business, not charity, it will require insurers to change their mind-set. How do you:
• Sell insurance to people who have never heard of the concept?
• Adjust claims in remote and inaccessible parts of developing countries?
• Make money for a policy where the premium is just a few dollars a year?
Market education and financial incentives
Insurers need to use innovative approaches to build trust among people unfamiliar with the concept of insurance. As well as market education, incentives such as tax exemption, subsidies and even compulsory cover will be needed to generate demand.
Date of publication: November 2009