Microinsurance is beginning to show the potential for growth that market participants and commentators have been predicting. At the heart of that growth is the provision of weather index linked insurance to farmers and businesses in developing countries.
The managing director of Africa Reinsurance Company Limited, Nigeria, Bakary Kamara, stated last week that he felt that a material impact to African economies of a potential income of $25 billion can be made by microinsurance. That’s well above the current income of $257m that 2008 figures show. He also stated that the potential customer base in Africa could total around 710m people.
That’s a staggering market size and even if those figures are well over-stated the opportunity for re/insurers, particularly the early entrants to these markets, is clear.
In a separate news report, the Munich Re Foundation and the International Labour Organisation have said that they see the potential size of the global market for microinsurance at as many as 3 billion people. Currently they say 140m are covered mainly in Africa and Asia. India, Indonesia and the Philippines have the biggest potential for growth according to the industry officials.
It is said that less than 10% of microinsurance is currently aimed at farms and farmers, but that is set to grow. Many observers see an easier job for those trying to provide weather and agriculture linked insurance as the education gap is smaller than with life and health insurance. We expect to see property insurance being adapted to fit the microinsurance model in the next few months as well.