La Equidad Seguros Colombia (CGAP Working Group on Microinsurance Good and Bad Practices Case Study No. 12)

Publication Date: Sep 2005
Published by: CGAP Working Group on Microinsurance
Document Type: Case Study (PDF)

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Are low-income households potential clients for insurance?

This paper examines the activities of the company La Equidad, focusing on the expansion of its products for specialized microfinance institutions (MFIs) and their clients.

The paper states that:

• La Equidad has developed two group-based life insurance products for lower- income households, called “Amparar” and “Equida”;
• It is showing that low-income people can invest in insurance if the product, the insurance channel and the premium are appropriate for them;
• It has had less success in marketing microinsurance through cooperatives;
• For MFIs specializing in microcredit, like WWF, “Amparar” expands the products available to them in a profitable way.

The paper argues that:

• With appropriate training, field staff of an MFI or a cooperative can sell voluntary life insurance to the low-income market;
• Microinsurance products should be simple;
• They should have a range of benefit options;
• Premiums should be adjusted to the capacity of the target market;
• Group products are more appropriate because they are less expensive;
• La Equidad has experienced difficulties such as management information systems (MIS) limitations and a lack of insurance culture;
• It is important to work only with financially viable MFIs.

The paper concludes with a discussion of future steps, such as:

• Finding new MFIs that can sell a product on a large scale;
• Raising awareness of what is available in the market and in government programs.