MUSCCO: Malawi Union of Savings and Credit Cooperatives

This paper details the growth of Malawi Union of Savings and Credit Cooperatives (MUSCO) and lists the lessons learnt from its experiences:

• Organizational Structures:
  • For micro insurance to be viable in Africa it has to be integrated with other operations such as savings and credit;
  • Distribution of the insurance service will have to be done through an existing organization, which already handles transactions with the working poor;
  • Claims verification is done at the SACCO level to reduce the cost of claims underwriting;
  • Viable microfinance would involve decentralization of claim preparation and verification to local organizations.
• Product Design:
  • Mandatory insurance policies minimize administrative and processing costs;
  • MUSCO has a simple life savings scheme, which is cost effective;
  • Simple terms make it easier for clients to understand them.
• Actuarial Reviews:
  • Actuarial reviews should be carried out regularly;
  • Social changes that affect insurance need to be carefully observed;
  • Actuarial reviews should specify how reserve funds should be amassed.

Other lessons are that:

• Micro insurance services should be applicable to local conditions;
• Activities in the area of nutrition and health should be undertaken by the insurer, in order to increase life expectancy and decrease the number of claims.