Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Opportunities in microinsurance


We’ve been big supporters (read our previous coverage here) of the various weather and catastrophe related microinsurance programs being piloted around the world over the last few years. While not perfect, these schemes are helping to get much needed cover to business people in developing countries to help them hedge against the very real weather risks they face. Index based microinsurance is particularly effective and accepted in the developing world as you can see exactly what you get for your premium and it’s predictable. That said, there are still issues around whether the cover is sufficient in some cases when the index trigger is perhaps not set as intelligently as it should be (previous post on this here).

Microinsurance is gaining in popularity and receiving a lot of attention both at government and corporate level now. Governments are realising the potential benefits their citizens can reap from a thriving microfinance industry and at the same time insurers are realising that this is a potential new revenue stream for them.

Lloyd’s of London has just published a really good report on the topic which looks at the opportunities available to the insurance industry if they embrace microinsurance and add it to their product portfolios. The report looks at the mechanisms and partnerships required to roll out microinsurance at a global level to the three billion people who need it the most. The report Insurance in Developing Countries: Exploring Opportunities in Microinsurance is available to read via their website.

We hope the insurance industry does increase its interest in providing well designed insurance products suited to developing nations. Dealing with the developing world will require a close cooperation with governments and international organisations who can help to ensure that the products are in the best interest of the nations they are aimed at and not just about making profits for global companies, social responsibility must be a part of any microinsurance project.

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