Paper
How Is Microinsurance Delivered? (Microinsurance Note #2)
Delivery channels in microinsurance
5 pages
This is the second in a series of short notes exploring microinsurance. The note explores:
- The efficiency of managing microinsurance products,
- The means of getting the product to the policy holder.
The note states that:
- It is critical for microinsurance products to have low premiums that cover costs.
- Technology solutions, and mandatory, group based insurance are two methods that help reduce costs.
- An important delivery channel for microinsurance is partnerships between insurers and microfinance institutions.
- Insurance companies are developing efficient delivery channels by working with a variety of intermediaries.
- Characteristics of a good microinsurance intermediary include:
- Regular servicing of transactions with low-income people,
- Having a large number of clients that are potential policy-holders
- Enjoying a relationship of trust with both customers and the insurer.
The note explores other delivery channels that could move microinsurance to the low-income markets. These include:
- Direct ownership and delivery by community-based organizations,
- Retail chains that focus on the low-income market,
- Computer-kiosks in rural areas,
- Remittances.
The note concludes by stating that:
- Microinsurance is growing rapidly and insurers are finding creative delivery channels,
- This trend is likely to continue, driven by the growing recognition of the potential of low-income markets, coupled with the need to keep administrative costs down.
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