Columna, Guatemala

In Guatemala, the only company that provides insurance to the popular section of the economy is COLUMNA. It provides insurance to more than half a million Guatemalans. This paper identifies the following lessons that could be drawn from the experience of COLUMNA:

• The most cost-effective way to reach the low-income market is through organizations that already reach large numbers of the target market. The distribution of micro insurance should be done through microfinance institutions (MFIs), cooperatives, trade unions and the like;
• For a successful partnership with popular organizations, the senior management of the organizations must be firmly committed to promoting micro insurance products;
• Insurance company shareholders should implement a policy on surplus that allows the company to grow and maintain good solvency levels;
• Benefits can be reaped from collaborations with international organizations that provide support, training and market information;
• A micro insurance product must be simple and the premiums should be affordable. There should also be a range of premium and benefit levels to make the product relevant to a higher percentage of the targeted market;
• Sales personnel must receive adequate training to promote micro insurance products; printed promotional material should be simple to understand;
• The insurance company must establish a mutually beneficial relationship with its marketing and distribution channels. For example, credit unions should receive a commission for selling policies; the cooperatives' employees who promote and sell microinsurance should receive cash incentives;
• The cooperative's administrative procedures regarding insurance products should be simple and computerized, so employees can easily provide customers with information regarding policy, premiums and claims;
• The insurance company should monitor the performance of its distribution channels on a regular basis.

[Adapted from Authors abstract]